Q4 2019 Industrial Report

In the fourth quarter of 2019, San Diego’s Industrial market had a positive net absorption of 175K SF, compared to a negative 232K SF in the previous quarter. The vacancy rate increased to its highest
level in three years, due to increased supply as a large contributor. Every submarket in San Diego posted annual rent growth above 4% in 2019, while market cap rates have steadied at 5.4%, a lower yield than the office sector. The average sale price reached $235/SF in the fourth quarter.

Investors continue to show interest in San Diego. Buyers remain active due to the diverse tenant pool and strong rent growth. Therecently delivered space and current under-construction inventory added supply to the market. A third of the supply delivered since the first quarter of 2018, 1.5M SF, is still available for lease, and more than 90% of inventory under development was available through the end of 2019.