After a decade of scarce industrial development in San Diego County, 2016 marked its strong return. About 1.3 million square feet of industrial/R&D space was completed, which is more than what was delivered between 2013 and 2015 combined. This year is expected to be an even more active year for industrial/R&D speculative and build-to-suit development with an additional 1.4 million square feet currently under construction. North County San Diego has become the concentrated hotspot for both speculative and build-to-suit industrial development. Nearly two-thirds of all new industrial/R&D development completed in 2016 was in North County, including about 233,227 square feet of speculative construction. This new wave of development was triggered by 16 consecutive quarters of rental rate increases and last year’s record-low vacancy rate of 4.7 percent for combined industrial/R&D properties countywide. Average asking rental rates are increasing quicker in North County than anywhere else in San Diego. North County’s average asking rental rates have increased by 5.9 percent since the end of 2015, whereas the countywide rate increased by only 3 percent in the same period. Vacancy will likely fluctuate between 4 percent and 5 percent throughout 2017 as net absorption keeps pace with new construction. Many organizations are …
