San Diego

San Diego County, comprised of 18 incorporated cities, covers a total area of 4,526 square miles with a population of more than three million. Major sectors contributing to San Diego’s economy are goverment, including defense; professional and business services; trade, transportation and utilities; tourism; and education and health services. Other major sectors include biotech, telecommunications, wireless, electronic and software. Due to its proximity to the international border, San Diego is an ideal location for companies engaged in international trade.

The San Diego real estate market consists of over 110 million square feet of office space, 192 million square feet of industrial space and 138 million square feet of retail space with vacancy rates around 15 percent, 11 percent and five percent, respectively, as of the first quarter of 2011. San Diego landlords and tenants are continually developing creative solutions benefiting both parties, despite their struggle through the current market downturn. At five percent vacancy rate, San Diego remains one of the strongest multi-family markets in the country due to positive demographic trends and numerous barriers to entry, including high land costs, a large rental population (Generation Y renters) and extremely limited new multi-housing development.

The short-term outlook for the San Diego commercial real estate market is cautiously optimistic as the recovery is expected to be gradual, and the long-term outlook is positive for several reasons: San Diego’s diverse economy, which is the 16th largest in the nation among 366 metropolitan areas based on GDP of $171.5 million reported in 2009; steady government and Department of Defense spending due to the military directly impacting job growth of other sectors such as manufacturing, construction, service, research and development, and technology; presence of some of the best universities in the nation; strong health and biotechnology sectors; young and growing population (median age 35), and a terrific quality of life.

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