July 28, 2017
San Diego retail market fundamentals made a strong rebound in Q2 2017, after a mostly flat first quarter. Leasing activity in Q2 was the highest in more than four years at 831,527 square feet, nearly doubling the figure posted in Q1, according to CBRE.
Cushman & Wakefield’s latest H1 2017 retail market report showed occupancy growth in the sector remained steady, while vacancy dipped further to 4.4% by midyear. That was down 40 basis points (bps) from the 4.8% mark posted a year ago, and substantially lower than the peak post-recession level of 7.2% nine years ago.
Strong activity drove net absorption to positive 162,585 square feet and vacancy to the lowest rate since the recession at 5%, noted CBRE. The average asking rate also broke a post-recession record, reaching $2.28 NNN, up $0.10 from the previous quarter.
Many higher-priced community and power centers became available as lower-priced neighborhood centers were absorbed, so asking rates may remain volatile if new higher-priced product is absorbed in the coming quarters, cautioned CBRE.
Cushman & Wakefield believes, with supply tight, new development and redevelopment projects underway should benefit the region’s retail marketplace in the near future.
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