San Diego Retail Leasing to Stay Strong but Vacancies to Rise

Leasing at San Diego retail shops will remain strong this year, but new construction will raise vacancy rates slightly, according to a commercial brokerage firm.

A report by retail specialists at the San Diego office of Grubb & Ellis Commercial Brokerage Services says expansion will continue “in all retail areas, from home-improvement (stores) to discount retailers.” The growth will create a modest rise in vacancy rates over the next two years, which should stabilize rents and land prices, the report said.

Rehabilitation and mixed-use projects will be “highly desirable” in densely populated areas where retailers will be able to justify higher rents, the report said. Master-planned sites will also be in demand, due to the limited amount of commercially zoned property, lower land costs and increased cooperation from local lawmakers and agencies.