logo redirect pin user minus plus fax mobile-phone office-phone data envelope globe outlook retail close line-arrow-down solid-triangle-down facebook globe2 google hamburger line-arrow-left solid-triangle-left linkedin wechat play-btn line-arrow-right arrow-right solid-triangle-right search twitter line-arrow-up solid-triangle-up calendar globe-americas globe-apac globe-emea external-link music picture paper pictures play gallery download rss-feed vcard account-loading collection external-link2 internal-link share-link icon-close2
United States
  • Global
  • United States
  • Angola
  • Argentina
  • Australia
  • Austria
  • Bahrain
  • Baltics
  • Belgium
  • Brazil
  • Bulgaria
  • Cambodia
  • Canada
  • Chile
  • Colombia
  • Czech Republic
  • Denmark
  • Egypt
  • Finland
  • France
  • Germany
  • Greece
  • Hong Kong
  • Hungary
  • India
  • Indonesia
  • Ireland
  • Israel
  • Italy
  • Japan
  • Jordan
  • Kazakhstan
  • Kenya
  • Korea
  • Kuwait
  • Latin America
  • Luxembourg
  • Mainland China
  • Malaysia
  • Mexico
  • Morocco
  • Netherlands
  • New Zealand
  • Norway
  • Oman
  • Pakistan
  • Panama
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Romania
  • Russia
  • Saudi Arabia
  • Singapore
  • Slovakia
  • South Eastern Europe
  • Spain
  • Sweden
  • Switzerland
  • Taiwan
  • Thailand
  • Turkey
  • Ukraine
  • United Arab Emirates
  • United Kingdom
  • Venezuela
  • Vietnam
Log In
  • Global Intranet
  • myCBRE
  • Services
    • Business Segments

      Advisory Services

      Global Workplace Solutions

      Real Estate Investments

      • Advisory & Transaction Services
      • Capital Markets
      • Project Management
      • Property Management
      • Valuation & Advisory Services
      • Advisory & Transaction Services | Occupier
      • Client Strategy and Consulting
      • Facilities Management
      • Project Management
      • Development Services (Trammell Crow Company)
      • Flexible Space Solutions (Hana)
      • Investment Management (CBRE Global Investors)
    • Services for Investors
      • Appraisal Management
      • Debt and Loan Valuation
      • Federal Government Leases
      • Leasing & Advisory
      • Litigation Support
      • Net Lease Properties
      • Small Balance Lending
      • Corporate Capital Markets
      • Debt & Structured Finance
      • Going Concern Valuation
      • Investment Accounting & Reporting Solutions
      • Loan Portfolio Sales
      • Property Management
      • Telecom Advisory
      • Construction Risk Management
      • Energy & Sustainability
      • Host
      • Investment Banking
      • Loan Servicing
      • Property Sales
      • Valuations for Financial & Tax Reporting
    • Services for Occupiers
      • Business Transition & Move Management
      • Energy & Sustainability
      • Host
      • Location Analytics
      • Portfolio Services
      • Space Enablement
      • Client Strategy and Consulting
      • Expense Management Solutions
      • Labor Analytics
      • Location Incentives
      • Project Management
      • Workplace
      • Corporate Capital Markets
      • Facilities Management
      • Leasing & Advisory
      • Network Advisory
      • Real Estate Accounting
    • Asset Types & Specialties
      • Office
      • Aerospace and Defense
      • Data Centers
      • Golf & Resorts
      • Multifamily
      • Parking
      • Industrial & Logistics
      • Affordable Housing
      • Hotels
      • Land
      • Nonprofit
      • Self-Storage
      • Retail
      • Aviation Properties
      • Gaming
      • Manufactured Housing
      • Omnichannel
      • Senior Housing
    • Industry Sectors
      • Industrial & Logistics
      • Energy, Oil & Gas
      • Law Firms
      • Technology, Media & Telecom
      • Retail
      • Financial Services
      • Life Sciences
      • Data Centers
      • Healthcare
      • Student Housing & Education
  • Properties
  • Research & Insight
    • Latest National Research & Reports
      The Way Forward
      Weekly Insights
      Reopening the World's Workplaces
      COVID Resource Center
  • People & Offices
  • About CBRE
    • Careers
      Case Studies
      Corporate Information
      Corporate Responsibility
      Executive Leadership - Global
      Investor Relations
      Media Center
      Suppliers

Next

Press Release
CBRE Hires Charlie Knudsen and Julie Cook to Focus on Credit Tenant Lease Financing
  • About CBRE
  • Media Center
  • SAN DIEGO’S COMMERCIAL REAL ESTATE MARKET CONTINUED TO SHOW SIGNS OF STRENGTH, DESPITE A SLOW-DOWN IN TRANSACTION VOLUME IN H1 2018

SAN DIEGO’S COMMERCIAL REAL ESTATE MARKET CONTINUED TO SHOW SIGNS OF STRENGTH, DESPITE A SLOW-DOWN IN TRANSACTION VOLUME IN H1 2018

San Diego, CA | September 13, 2018
  • Email
  • Share
  • Tweet
  • Share

$name

Office deals posted the second highest price per square foot in more than ten years, according to CBRE Research

San Diego – September 13, 2018 — San Diego commercial real estate transactions continue to demand high price tags across all product types, compared to the five-year average, according to CBRE Research. The H1 2018 Trends: San Diego Capital Markets Report tracks property sales activity for the San Diego region and uses cap rate data from the CBRE North American Cap Rate Survey  to analyzes local cap rates and sales figures by buyer and product type.

“San Diego’s market fundamentals are supported by strong regional economic drivers, “ said Hunter Rowe, vice president of CBRE in San Diego. “Demand for quality, well located, amenitized office and industrial product remains coveted, particularly for value-add and core real estate. Although cap rates remained largely unchanged from H2 2017, the spread between stabilized office and industrial product is 50 to 75 basis points.”

After coming off a banner year in 2017 across all product types, particularly H2 2017, which was the highest volume half in more than ten years, total sales volume slowed significantly in H1 2018. Total sales were down over 35 percent from the previous half and nearly 25 percent lower than the five-year average. Although sales activity has slowed through the first six months of 2018, overall sales volume is expected to rebound in H2 2018 with several high-profile listings scheduled to close.

Despite the slowing transaction volume, deals continued to command considerable investor interest, resulting in higher values. Across all product types, price per square foot or unit were up compared to the five-year average. Office deals posted the second highest price per square foot in more than ten years due to more core-plus and stabilized assets coming to market. Apart from the recent uptick in retail cap rates, the balance of the market remained stable.

Among the major commercial real estate sectors:

Office

San Diego office cap rates for Class A and AA increased 12 and 13 basis points (bps), respectively due to buyer demand, evidenced by a softening in sales volume although rents and tenant demand remained strong in the office sector. Cap rates for Class B and C office assets remained flat from H2 2017.

There were three office deals over $100 million in H1 and another just below. Of the remaining deals, 15 were between $10 million and $50 million and 11 were below $10 million.

Price per square foot remained 16.2 percent above the five-year average, showing many buyers are still willing to pay a high price.

Industrial

Industrial product continues to be a hot asset and cap rates fell for the second straight half to the lowest rate on record for all classes, going back to 2009.

Vacancy rates are at or near all-time lows while rents have climbed in recent years, making it an attractive investment for buyers looking to hold and receive steady cash flow.

More than 3.5 million square feet in new industrial construction is expected to increase the inventory in the next several years, which will do little to satisfy the overwhelming tenant demand for quality industrial space in San Diego.

Retail

Retail cap rates continued to rise both locally and in most U.S. metros. Market fundamentals in the local sector are strong, but limited buyer demand is likely holding back asset value. San Diego had the lowest stabilized cap rate for Class B neighborhood/community centers and the fourth lowest cap rate for Class A power centers across all U.S. metros.

Despite the softening overall volume of sales, price per square foot was 14.6 percent above the five-year average mark.

Multifamily

Already low, multifamily cap rates fell to a record low (going back to 2012), when averaged across geography and product class. Suburban product remained especially attractive, due in part to the relatively low supply pipeline for that type of product. The majority of product in the pipeline is infill, focused in and around downtown San Diego, making suburban multifamily an attractive long-term play.

Investors have been willing to pay top dollar for multifamily properties. The average sale reached $271,000 per unit in H1, the highest on record going back to 2003.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

Contacts

Cole-Mortland_326x248
Cole Mortland
Corporate Communications
+1 858 6464702
+1 858 5463985
  • Corporate Information
  • Corporate Responsibility
  • Case Studies
  • Media Center
  • About Us
  • Careers
  • People and Offices
  • Global Leadership
  • Investor Relations
  • Contact Us
  • Global Web Privacy and Cookie Policy
  • Sitemap
  • Terms of Use
  • United States Privacy Policy
  • Our Response to SCHREMS II
  • Twitter
  • Facebook
  • LinkedIn