2022 Q3 Industrial San Diego Region
- Countywide average asking monthly rental rates remained flat in Q3 at $1.47/SF triple-net (NNN); this equated to a 9% year-over-year (YoY) increase.
- Overall vacancy increased slightly by 13 basis points (BPS) to 2.66%. The increase was driven by a few projects in specific markets while overall demand generally has continued to otherwise be positive.
- Pure industrial vacancy increased to 1.68% while flex vacancy is 5.09%. Flex vacancy is at its lowest rate ever recorded; industrial vacancy increased slightly over last quarter’s lowest rate on record.
- Over 1.8 million SF of new construction was completed in the nine months of this year. The South County market made up three-quarters of the space completed.
San Diego’s industrial market remains stable
The industrial and flex property segments continue to exhibit stable demand despite some negative absorption in a few select submarkets. Industrial and flex vacancy rates stood at 1.68% and 5.09%, respectively, which still remain at historically low levels. Flex demand has been particularly strong in life science/wet lab space where office conversions continue to create the most viable options for addressing demand and increasing inventory. Additionally, around 60% of the new first-generation space
under construction is devoted to life science/wet lab uses. Barring any recession concerns, the industrial/flex market can be expected to continue to be strong for the remainder of the year and into 2023.