San Diego Appraiser Blog

2010  San Diego Apartment Trends

Source: Cassidy Turley, BREB Commercial

Recent San Diego Real Estate Charts

Single Family Home Market Trends

As noted by the San Diego Union Tribune, the economic index at long last turned positive.    

This past month we completed the appraisal of a larger retail building (Over 12,000 square feet) in the Hillcrest area of San Diego. Overall, we were impressed at how well the area has done during the recession. Gentrification into North Park over the past few years has continued along University Avenue with new gyms and restaurants serving the newer condominium projects and repositioned homes in the area. A recent lease in the area indicated that retail tenant improvement allowances were down by 50% from the market peak in 2007 (Moved from $30.00 SF to $15.00 SF), and that market participants were discounting the going in lease rate for the first year, then going into a rental rate that assumed stabilized (post recession) market conditions. As the speed of the San Diego economic turnaround is unknown, lease terms utilizing a CPI index rather than a fixed escalation rate are recommended.

Recent projects have included a number of retail centers in San Diego.   It was interesting to note that Cap Rates on primary retail corners were below 7% at the end of 2009, and generally around 6.5%.  Occupied, secondary retail locations are taking the brunt of the blow with rental mark downs of up to 30%, and Cap Rates in the 7.5% to 8.5% range.

 Retail OAR Market Array

Considerable retail inventory was recently noted in Escondido.  Its location on the 78 beltway where so many power centers were built during the boom means older centers in the core must reposition.  As the commercial market bottoms some of these older retail buildings will have a Highest and Best Use as apartments.