San Diego Office Space Rentals Showing Rent Incentives, Concessions as Rental Rates Slow
With little to no office employment growth shown in 2007, the market for San Diego office space rentals is showing signs of slowing down in 2008, waiting for newly constructed space to be absorbed and for rent rates to level off. Although vacancy rates have slowly been rising over the past three years to its current 12.1 percent, average annual office space rental rates have continued to climb from $28.42 to $30.69 per square foot. However, due to the more than 3 million square feet of office space constructed last year, and the 3 million square feet scheduled for delivery this year, it's likely that the oversupplied market for San Diego office space rentals will cause vacancy rates to rise.
Last year, almost 2.3 million square feet of office rental space was absorbed, nearly doubling the previous year's absorption - and more is still under construction throughout San Diego County . Looking at the list of 209 office projects proposed or underway, most of the San Diego office space rentals will not be developed in the nearly saturated areas such as downtown, UTC or Kearny Mesa. Instead, 44 office projects are/will be located in Carlsbad, 42 in San Marcos/Vista, 21 in Oceanside, 21 in South San Diego, and 19 in East County. Downtown and UTC each account for two projects and Kearny Mesa, eight projects, with the remaining construction spread out in other areas of the county.
Meanwhile, some companies are downsizing, particularly those in the residential debt and real estate sectors, leaving in their wake an influx of sublease office rental space and creating more affordable opportunities for other office tenants.
Now that the market has begun to adjust, landlords in general are holding firm on their asking rates, but some are offering incentives which will lower the effective rent over any lease term. At MBA Commercial, we can help you locate the San Diego office space rental that's best for your company at the best rate.