Sometimes it takes 50 years of combined experience to really gauge the nature of a recovery. We chatted with a couple of SD vets, who both say the same thing: This cycle is unique.
Heritage Group's Dan McCarthy and Kyle Clark, who have both been through a few economic cycles, say the recovery is vastly different, mostly because big business is carrying the load. In the past, it was small businesses that led the way in a recovery. “We really haven't seen the groundswell of mom-and-pops…that we usually see in a recovery,” Kyle says.
And the data supports it. JLL's Q1 office report shows the biggest leases were made by the who's who of San Diego's national company and midsized firm base, including Kaiser Permanente's 97,300 SF expansion at Rio San Diego Plaza; Daybreak Solutions' 70k SF lease; Edgewave Inc's 37k SF renewal at Carmel Corporate Plaza (here); and Turtle Beach's 34,500 SF deal at Scripps Northridge. And that plays into another trend this time around: Technology, healthcare and life sciences are also leading the way in growth. “San Diego is an innovation economy,” Dan says, adding that it helped us weather the storm better than most markets.
Still, those bread-and-butter office leases are finally perking up. The duo got Accumen into a five-year lease for 1,200 SF at Alvarado Medical Plaza III. The firm, which operates a medical lab, plays right into the story of San Diego's ongoing recovery, Dan says. He expects companies to continue to lease at a “nice, slow tick” across the metro area, with the focus now going toward more suburban Class-B properties since much of the area's Class-A stock has been claimed and gone up in price.
