SD Office Has Strongest Quarter in History
Job numbers are looking good in San Diego and developers are taking advantage, predicting ramped up leasing and an increased appetite for the new product coming online.
DTZ's Brett Ward says the numbers will help the market absorb 1.5M SF of office space in the next 12 months. And DTZ is projecting San Diego businesses will produce some 31,500 new jobs this year, including nearly 7,000 professional service jobs (the ones that most likely use office space). Coming off the strongest quarter in San Diego's history (846k SF absorbed), Brett says there are still some big tenants out in the market to continue the momentum.
Brett says there are a fair number of big companies in the market reevaluating real estate strategies. The big job winners for SD's economy include those in tech, telecom, medical device and life science, he says. Among the biggest companies scouting the market are Intuit, which is seeking 250k SF, Verizon seeking to consolidate multiple locations into 100k SF and video camera maker GoPro, which is scouting for 50k SF of expansion.
One of the hottest areas is Del Mar Heights, where Brett has been tapped by Kilroy Realty to lease The Heights, a $45M, 75k SF trophy Class-A mid-rise in the affluent submarket that's going completely spec. It's also on the border of Kilroy's planned One Paseo mixed-use project, with an extensive lineup of retailers and restaurants.
Kilroy VP Jamas Gwilliam, who recently relocated back to his hometown of San Diego, tells us they're pursuing a number of prospective tenants for the property, delivering in October. And that interest is being driven in part by the sheer lack of large blocks of space available in Del Mar Heights.
Kilroy has been in a six-year process to shepherd One Paseo, a multimillion-dollar project that could include 484k SF of office, 200k SF of retail, a 50k SF cinema and a 608-unit apartment project, through community and county approvals. That is, of course, if the City of San Diego gives final approval (the vote comes up again Feb. 23).
So far, Kilroy has secured True Food Kitchen, Pinstripes (a bocce/bowling concept) and Puesto. As Jamas sees it, the retail will feed office demand for not only One Paseo but surrounding office projects. “We know that One Paseo is going to have a very captive audience for users in this market,” he says. “I mean we have enough interest from retailers and restaurants that we could lease this whole project.”