San Diego Retail Market Picking up Speed, Cassidy Turley Report Shows

San Diego Retail Market Picking up Speed, Cassidy Turley Report Shows

Published on January 29, 2014

SAN DIEGO – Cassidy Turley, a leading commercial real estate services provider in the U.S., has released its year-end 2013 San Diego County retail report showing that the market picked up speed in the second half of the year, absorbing 600,815 square feet) of space in semi-annual activity not seen since 2008. 

According to the Cassidy Turley study, the surge helped offset 377,971 square feet of negative retail absorption in the first six months of the year. As a result, San Diego County recorded 222,844 square feet of positive retail activity in 2013 – a pace that still exceeds the annual average of 211,700 square feet in the post-recession years of 2010 through 2012.

“Assuming the economy continues to grow at a moderate rate and consumer spending does not lose momentum, the San Diego retail market is a year away from transitioning into a long-awaited growth mode,” said Phil Lyons, CCIM and Managing Director in the San Diego office of Cassidy Turley. “Restaurants, grocery stores, wireless, electronics, fitness and sporting goods tenants are expected to account for the majority of leasing activity in 2014.”

Over the past four years, the San Diego County retail market has absorbed 860,000 square feet, recovering 72% of the 1.2 million square feet that was returned to the market in 2009, the worst year in the recent recession. “As a result, vacancy rates have decreased for all center types, which is good news for area landlords,” said Mr. Lyons.

Leading the county’s 29 retail submarkets in second half net absorption were Downtown, San Marcos, Oceanside, Chula Vista/Bonita and Carlsbad – which combined absorbed more than 400,000 square feet.  “The new Headquarters at Seaport District in Downtown contributed to this strong pace, adding a number of new shops and restaurants including The Cheesecake Factory, Eddie V’s Prime Seafood, and Geppetto’s Toys,” said Randee Stratton, Associate with Cassidy Turley. 

The Cassidy Turley study shows that current countywide vacancy for all center types, including sublease space, is 5.3% compared to 5.9% the same time a year ago. Vacancy also is 190 basis points (bps) lower than the peak rate of 7.2% recorded at the end of the last recession (2009), and 110 bps below the post-recession semi-annual average of 6.4%. 

Of the 29 San Diego County retail submarkets, Kearny Mesa, UTC/La Jolla, La Mesa/Lemon Grove, Carmel Mountain Ranch and Mission Valley all ended the year with vacancy below 3%. Sixteen other submarkets finished with vacancy between 3% and 6%. Vacancy in the remaining eight submarkets stands between 6.1% and 15.4%, with San Marcos and Vista recording the highest vacancy at 15.4% and 10.6%, respectively. Vista saw the most space returned to the market in the fourth quarter with Office Depot vacating 28,000 square feet.

“Although negotiating power between landlords and tenants is weaker in those submarkets still struggling with higher vacancy, there is no new construction under way which will keep leasing activity overall very competitive, said Mr. Lyons.  ”This is especially true for well-positioned properties where demand has begun outpacing supply.

“Landlords with less desirable locations will attempt to attract and retain quality tenants by investing in the revitalization of their properties or offering concessions,” Mr. Lyons continued. “The vibrancy of San Diego’s retail sector was greatly hurt by the recession, but fundamentals are recovering.”

Cassidy Turley research shows that theyear-end 2013 overall countywide monthly average asking rent for all center types was $1.87 per month per square foot triple net (NNN), a 4.6% decrease from a year ago. All center types recorded a decrease in average asking rent except for neighborhood centers which recorded a 6.8% increase over the year, as well as well-located Class A shopping centers where effective rents are, on average, $3.50 (NNN) and above.

“Several economic indicators directly affecting demand for retail space have recorded sustained improvements, which is a good sign for the local retail market,” said Jolanta Campion, Director of Research with Cassidy Turley’s San Diego office. “The national consumer confidence index is 74.2 compared to 70.4 a year ago and 48.3 at the end of 2009.  Additionally, the national and local unemployment rates continue to decline, currently standing at 6.7% and 6.8%, respectively. Locally, all employment sectors are forecasted to grow 2% (or by 25,820 jobs) in 2014, and this will add steam to the area retail market.”

About Cassidy Turley

Cassidy Turley is a leading commercial real estate services provider with more than 3,800 professionals in more than 60 offices nationwide. Based in Washington, DC, the company represents a wide range of clients—from small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm completed transactions valued at $22 billion in 2012, manages approximately 400 million square feet on behalf of institutional, corporate and private clients and supports more than 23,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated commercial real estate services—including capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley enhances its global service delivery outside North America through a partnership with GVA, giving clients access to commercial real estate professionals in 65 international markets. Please visit for more information about Cassidy Turley.


Sandra Grove


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