Assessing San Diego’s Commercial Real Estate Market

Posted on November 3, 2016 · Posted in Tenant Representation

Recent Trends in Commercial Leasing

Lately, the San Diego leasing market has been very active. Rates for rentals have gotten back to the level they were at in 2006-08, before the recession. In markets such as La Jolla/UTC, Rancho Bernardo, Sorrento Valley and Sorrento Mesa, we are seeing a balance between supply and demand, with a stabilization meaning both landlords and tenants have an even playing field.

San Diego Market Drivers

The past 18 months has seen an improvement in the San Diego leasing market, with more companies looking to expand their offices. We have also seen companies looking to lease at more than one location, which has helped the market.

There are few main things that seem to be the impetus for the growth in the market. For one thing, the local economy as a whole has been getting better, with companies putting money into their businesses and hiring new employees. More companies are truly expanding, rather than simply seeing mergers, or companies trying to grow without allocating resources towards it.

In San Diego, this has especially manifested itself in the technology sector. As has historically been the case, technology start-ups have been a big driver of growth in the San Diego real estate market, and this is still the case. Start-ups are often drawn to San Diego thanks to a surplus of submarkets that offer a great balance between work and life.

Tenant Strategies and Guidance

There are a few basic strategies which can help tenants in San Diego county who are searching for leasing space. One tip is to limit your search to building that have 10,000 square feet or more. Another strategy is to look at buildings which have a track record of some vacancy, which can help you get a quality deal. One advantage of these types of buildings is that they typically can offer the chance to expand as needed, without having to break the lease or relocate your business.

In your lease, it’s important to have a first right of refusal clause. Another important item in your lease is early occupancy and free rent, especially if the landlord wants to see a higher contract rent. In short, while many people just look at finding the lowest starting rent, there are many important factors in finding the right space and signing a lease that works for you.

If your business is looking to lease office space in San Diego, contact Synergy Real Estate Group today for a free property report.

Photo credit: Bill Dickinson