San Diego companies increase bets on quality office space
As the innovation sector continues to grow, one of their most important focuses is to retain top talent by providing a pleasant work environment
June 19, 2019
- From the start of 2018, of the 285 new Class A office leasing deals (excluding renewals), 70 percent were newly constructed or renovated buildings. This flight to quality is one noticeable trend defining the current San Diego office market.
- As the innovation sector continues to grow, one of its main focuses is on retaining top talent by providing engaging work environments. This trend has been most notable in defense/aerospace, life sciences, and technology companies, as evidenced by their increased appetite for newer class A office space, particularly in the UTC, Del Mar Heights, Rancho Bernardo, Scripps Ranch, and Sorrento Mesa submarkets.
- Buildings constructed or redeveloped within the last two cycles are seeing rents increase as much as 11 percent, as well as 23 percent longer average lease terms. While current ground-up spec development is not quite as robust as the last cycle, investors continue to pick up value-add renovation opportunities, upgrading older office and industrial buildings into Class A or creative assets in order to lure high-caliber tenants. Developers have been especially active in the Mission Valley and Downtown submarkets where there has been an increase in the redevelopment of aging Class A buildings.
Source: JLL Research