Q2 2012 Industrial Report-San Diego

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Q2 2012 Industrial Report-San Diego

  1. 1. Industrial ReportNorth San Diego County2nd Quarter 2012PREPARED BY: COLLIERS INTERNATIONALAdam Molnar 5901 Priestly Drive, Suite 100Greg Lewis Carlsbad, CA 92008Tucker Hohenstein Fax 760 438 8925Mike Erwin www.colliers.com/carlsbad
  2. 2. Q2 2012 | INDUSTRIALNORTH COUNTYAT A GLANCE OVERVIEW The North San Diego County industrial market is largely decentralized and comprised of five cities including Carlsbad, Escondido, Oceanside, San Marcos and Vista. Situated 35 miles north of downtown San Diego and 52 miles south of John Wayne Airport in Orange Oceanside County, the coastal location is a major factor in the area’s appeal to corporate users and Vista its 826,985 residents. The industrial market consists of approximately 52.3 million square feet. By comparison, San Escondido Carlsbad Marcos the total San Diego industrial market is 188.3 million square feet. North County Ocean represents 27% of the total. The following table summarizes the inventory and vacancy by submarket:MARKET INDICATORS Submarket Buildings Total Inventory Vacant SF Vacancy Rate Q2 Q3 Carlsbad 484 14,999,770 2,028,144 13.5% 2012 2012 (forecast) Escondido 636 7,175,725 402,564 5.6% VACANCY Oceanside 394 8,014,725 1,128,279 14.1% NET ABSORPTION San Marcos 491 8,634,579 534,993 6.2% Vista 530 13,374,822 987,737 7.4% CONSTRUCTION Total 2,535 52,199,621 5,081,717 9.8% RENTAL RATE LEASE CONCESSIONS North San Diego County is well known for its highly skilled labor force, excellent transportation network, pro-growth business environment, significant Federal Government presence, desirable vacation destination including world class beaches, resorts, golf venues, and abundant employee housing. The North San Diego County industrial market is home to a diversified mix of usersINDUSTRIAL/R&D VACANCY RATES including defense, telecommunications, software, medical manufacturing, golf and leisureQ2 2012 sports, life science and technology firms. Corporate neighbors include:INDUSTRIAL/R&D VACANCY RATES CARLSBAD HISTORICAL MARKET TRENDS VISTA HISTORICAL MARKET TRENDSQ2 2012 Carlsbad 13.5% Coca-Cola Isis Pharmaceuticals DJO, Inc. Escondido 5.6% Medtronic Life Technologies Linear Oceanside 14.1% Titleist Golf Cobra / Puma Golf Killion Industries San Marcos 6.2% ViaSat TaylorMade Golf Jeld-Wen Windows and Doors Covidien Denso Wireless Sumitomo Electric Vista 7.4% Abbott Labs US Foods McCain, Inc.North County 9.8% Genentech Philips Respironics Directed Electronics 0% 5% 10% 15% Callaway Golf Thomson Reuters GIA L-3 Communications Rockwell Collins Hunter Industries SAIC John Deere Watkins Manufacturing OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDSwww.colliers.com/carlsbad
  3. 3. AT A GLANCE | Q2 2012 | INDUSTRIAL | NORTH COUNTY OVERVIEW The total vacancy rate for Industrial/R&D product in North NORTH COUNTY HISTORICAL MARKET TRENDS County has dropped below 10% for the first time since 2008, led by Carlsbad with 116k s.f. and Oceanside with 1,500 14% 105k s.f. of positive absorption in 2Q 2012. Half way 12% 1,000 through the year all five North County submarkets are in 10% the black and the net absorption has already surpassed the Vacancy Rate SF (000s) 500 8% total for all of 2011. R&D product, which only accounts for one fifth of the overall inventory, has recorded more positive 0 6% absorption than Industrial in 2012. This is an encouraging 4% sign for the market considering that R&D has traditionally -500 2% lagged behind Industrial. -1,000 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ACTIVITY Q2 Vista led the charge in another impressive quarter for Net Absorption New Supply Vacancy leasing activity with 5 transactions totaling 227,000 SF that included CTDI, Brown Safe, Select Supplements, Electra Bicycle, and March Plasma. The largest lease deal in 2Q 2012 was Skin Medica’s 81,000 SF expansion and relocation in Carlsbad. Other significant lease transactions included Crescent Electric in San Marcos and Pillow Pets in Carlsbad. Investment sale activity was concentraed in Carlsbad and featured a little bit of everything including a fully leased property with a partial sale leaseback (2777 Loker Avenue), a 90% vacant REO property (3115 Melrose Drive), and a tenant in tow transaction (5770 Armada Drive). Owner user sales included Carlsbad Technology, Inc. at 5928 Farnsworth Court in Carlsbad, Falmat at 1810 Diamond Street in San Marcos, and Buffini at 6349 Palomar Oaks Court in Carlsbad. The only significant land sale in 2Q 2012 was at Bressi Ranch in Carlsbad where Ryan Companies sold 8.0 acres to a hotel developer for $13.50/SF. FORECAST The majority of distressed assets and land have been purged from the system and values are beginning to reset. Expect vacancy to continue to trend downward in the second half of 2012 as a result of robust demand, a dwindling inventory, and no new construction underway or in the planned stages. In particular, there were very few large Industrial/R&D buildings (above 50,000 SF) developed during the last cycle because of high land prices and construction costs. The result of this and recent absorption is a severe shortage of functional buildings in this size range. Users with larger requirements or needs for newer, more functional product will be forced to look towards Build to Suit options at higher rates or multiple locations. For the handful of functional spaces that remain, look for upward pressure on lease rates and sale prices to move closer to replacement costs. This document has been prepared by Colliers International for advertising and general information only. Colliers prepared by ADAM MOLNAR, GREG LEWIS International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950 should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
  4. 4. Q2 2012 | INDUSTRIALCARLSBADAT A GLANCE OVERVIEW Half way through 2012 the absorption numbers for Industrial/R&D in Carlsbad are on pace to surpass those of 2011. R&D product outperformed Industrial for the second quarter in a row with 161,324 SF of positive absorption, lowering the R&D vacancy Oceanside rate by more than two percentage points to 13.87%. The 116,164 SF of overall positive Vista absorption for Industrial/R&D in Q2 2012 was nearly 10 times that of Q1 and resulted in a combined vacancy rate of 13.52%, down from 14.41% in Q1 2012. San Carlsbad Marcos ACTIVITY Ocean Leasing activity was led by Skin INDUSTRIAL/R&D VACANCY RATES CARLSBAD HISTORICAL MARKET TRENDS VISTA Q2 2012 Medica’s choice to relocate and 700 16% expand into 81,712 SF withinMARKET INDICATORS 600 14% the Carlsbad submarket. Other 500 12% Q2 Q3 significant transactions included 400 10% Vacancy Rate SF (000s) 2012 2012 (forecast) Black Box Distribution who 300 8% VACANCY signed a 65,000 SF lease with 200 6% BLT Enterprises as part of a sale 100 4% NET ABSORPTION leaseback and Pillow Pets who 0 2% relocated from Oceanside. Others -100 0% CONSTRUCTION 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 including Linear Corporation and Q2 RENTAL RATE Select Supplements decided to Net Absorption New Supply Vacancy renew at their current locations.LEASE CONCESSIONS OCEANSIDE HISTORICAL MARKET TRENDS SAN M After a first quarter that saw no sales activity, the market for both Investor and Owner User sales rebounded aggressively in 2Q 2012. There were three significant investment sales including a fully leased property with a partial sale leaseback (2777 Loker Avenue), a 90% vacant bank owned property (3115 Melrose Drive), and a tenant in tow transaction (5770 Armada Drive). On the owner user side there were four transactions, the largestINDUSTRIAL/R&D VACANCY RATES of which took place at 5928 Farnsworth Court where Carlsbad Technology, Inc. wasQ2 2012 INDUSTRIAL/R&D VACANCY RATES CARLSBAD HISTORICAL MARKET TRENDS building within walking distance of their current facility in the able to buy a 52,000 SF VISTA HISTORICAL MARKET TRENDS Q2 2012 Carlsbad Research Center. Carlsbad Carlsbad 13.5% Escondido 5.6% FORECAST With no new construction underway or in the planned stages and a significant amount of Oceanside 14.1% user activity in the market, expect vacancy rates to drop in the second half of 2012. In San Marcos 6.2% particular, larger users above 75,000 SF face an acute shortage of options. As a result Vista 7.4% of this lack of supply there has been an increase in Build to Suit inquiries. However, lease rates and sale prices for new product based on land and construction costs areNorth County 9.8% still considerably higher than existing product. Expect a slight uptick in rents for existing 0% 5% 10% 15% inventory due to these constraints. OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDSwww.colliers.com/carlsbad
  5. 5. El C min a AT A GLANCE | Q2 2012 | INDUSTRIAL | CARLSBAD oR ea more Ave l Syca Carlsbad Oaks North Busines s P Whiptail Loop us es s a Carlsbad Research Dr se Center r rk lro r D Me Faraday Ave F Fa rad ay Av e El F Carlsbad ue Oaks Carlsbad rte t Raceway S El L t t Ca oke mi er A Lio no nshead he Ave Re R v vesings al abad Palomurse ar A irpo lvd rt Rd g eB Colle McClellan Palomar Palomar Gateway Rd Forum Carlsbad Airport Airport Bressi Center 7 Ranch d tR 8 or rp Ai ar m alo P Me elr os o e Dr r Ave ttia E El F Palomar Airport nse Poi Business Park u uer te S t t TRANSACTION ACTIVITY - Q2 2012 SALES ACTIVITY Rd Alga El SIZE SF SALE PRICE PRICE/SF Ca # PROPERTY NAME/ADDRESS BUYER TYPE mi no 1 2777 Loker Avenue Investor 123,454 $11,500,000 $93.15 Re e Av ala 2 3115 Melrose Drive Investor La Costa Resort 103,547 $8,725,000 $84.26 Av & Spa 3 5770 Armada Drive iar aP Investor 81,712 $15,600,000 $190.91 kw Park Hyatt y 4 5928 Farnsworth Court Owner User 52,853 $4,670,453 $88.36 Aviara Resort 5 6349 Palomar Oaks Court Owner User 27,262 $2,990,000 $109.68 6 1911 Palomar Oaks Way Owner User 23,325 $2,654,000 $113.78 7 5816 Dryden Place Owner User 22,156 $1,713,168 $77.32 LEASING ACTIVITY # PROPERTY NAME/ADDRESS TENANT NAME SIZE SF TERM EFF RATE/SF 8 5770 Armada Drive Skin Medica 81,712 180 months Confidential 9 2777 Loker Avenue BlackBox Distribution 65,412 36 months $0.69 NNN 10 1950 Camino Vida Roble Linear Corp. (renewal) 50,000 72 months $0.95 NNN 11 2045 Corte del Nogal Pillow Pets 36,404 36 months Confidential 12 5800 Newton Drive Select Supplements (renewal) 28,857 60 months $0.79 NNN 13 5817 Dryden Place Weston Solutions 18,760 60 months $0.98 NNN This document has been prepared by Colliers International for advertising and general information only. Colliers prepared by ADAM MOLNAR, GREG LEWIS International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950 should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
  6. 6. Q2 2012 | INDUSTRIALESCONDIDOAT A GLANCE OVERVIEW The Escondido Industrial market continues to rebound strongly from the turbulent last few years. The industrial market boasts the lowest vacancy in all North County Cities and it will continue its streak of three consecutive years of positive absorption. The vacancy Oceanside Vista rate peaked in 2009 at 9%, and now is at a healthy 5.6% vacancy rate. Sales prices have begun to climb for smaller buildings (less than 10k sf), and prices have stabilized for larger buildings. Lease rates remain low but should begin to climb as the low supply San Escondido Carlsbad Marcos begins to effect the increased demand. Ocean Regarding significant developments ESCONDIDO HISTORICAL MARKET TRENDS NOR in Escondido: The Palomar 300 10%MARKET INDICATORS Pomerado Hospital is near 9% 200 Q2 Q3 completion and we should begin to 8% 100 7% 2012 2012 (forecast) see the Escondido Research and Vacancy Rate SF (000s) 6% 0 Technology Center attract medical 5% VACANCY tenants and supporting distribution -100 4% 3% NET ABSORPTION and manufacturing companies. -200 2% The Nordahl off-ramp and bridge -300 1% CONSTRUCTION are being widened, as the hospital -400 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 infrastructure money is allocated Q2 RENTAL RATE for infrastructure expense around Net Absorption New Supply VacancyLEASE CONCESSIONS Escondido, which will improve access for industrial tenants and truck routes. Also, HISTORICAL MARKET TRENDS begin NORTH COUNTY Haman construction will construction on the ~100,000 sf building for Cor-O-van, and Stone Brewery is working on hotel drawings for submittal to the City. ACTIVITYINDUSTRIAL/R&D VACANCY RATES There was more than 30 Escondido Industrial lease transactions in 2Q, with the majority ofQ1 2012 activity occurring in the multi-tenant parks in sizes ranging from 1,000 sf to 4,000sf. There INDUSTRIAL/R&D VACANCY RATES CARLSBAD HISTORICAL MARKET TRENDS were only four lease transactions over 10,000 sf, twoHISTORICAL MARKET TRENDS 20,000 sf. VISTA of these were more than Q2 2012 Carlsbad These two larger tenants consisted of GP Strategies leasing the Decratek building on Progress 13.5% Place and VIT Products leasing 2344 Auto Parkway. Coincidently, the larger and smaller Escondido 5.6% Escondido tenants average lease rates have stabilized at approximately $.65 modified gross. Oceanside 14.1% San Marcos The Sale transactions were also in the smaller range with three sales less than 6,000 sf, with 6.2% an average price of approximately $103 psf. There was a 10,000 sf short sale at $89 psf on Vista 7.4% Engle as well as a 7,100 sf building on 2.44 acres of land that closed for $1.7MNorth County 9.8% FORECAST 0% 5% 10% 15% The Escondido industrial market, which has historically been catagorized as a “mom and pop” small building market is now beginning to get recognized as a potential destination for quality tenants along the I-15 corridor. Moreover, it also surrounds a state-of-the-art and the newest hospital in the nation, which will bring national attention to the city. OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDSwww.colliers.com/carlsbad
  7. 7. AT A GLANCE | Q2 2012 | INDUSTRIAL | ESCONDIDO oad hl R rda No Myers Avenue 78 Mo ntie l Rd Country Club Dr Quin ce S c Mis sion nue Roa Ave t d ion Miss Roc ck S prin r g sR Rd Au ve to nue Ave Dri Pa ton rk Wa hing Was en y eas ndr NA Sim Palomar pso nW Pomerado ay Hospital Ind ust ria Cit Escondido lA tra ve rc Research ado d & Tech Center Pk wy ue ven le A Ha Escondido N. Auto Park ve Dri en eas ndr SA ay Auto P kw ark Par W W ay ley Val Ent erp ris eS tTRANSACTION ACTIVITY - Q2 2012SALES ACTIVITY # PROPERTY NAME/ADDRESS BUYER TYPE SIZE (SF) SALE PRICE PRICE/SF No building sales above 10,000 square feetLEASING ACTIVITY # PROPERTY NAME/ADDRESS TENANT NAME SIZE (SF) TERM EFF RATE/SF 1 2835 Progres Place GP Strategies 23,827 65 Months $0.68 NNN This document has been prepared by Colliers International for advertising and general information only. Colliers prepared by ADAM MOLNAR, GREG LEWIS International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950 should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
  8. 8. Q2 2012 | INDUSTRIALOCEANSIDEAT A GLANCE INDUSTRIAL/R&D VACANCY RATES CARLSBAD HISTORICAL MARKET TRENDS VIST Q2 2012 OVERVIEW Oceanside continues to maintain the highest vacancy in North County at 14.08%. However, the 105,017 SF of positive net absorption during Q2 2012 added to the 115,069 SF in Q1 brings the brings the midyear total of space sold and leased 220,086 SF. This Oceanside activity has reduced the vacancy from 17.10% to its current level which is a reduction of Vista 3.02% in 6 months. There is now approximately 1.1m SF of vacant industrial space in the market. San Carlsbad Marcos ACTIVITY Ocean Industrial The activity in the OCEANSIDE HISTORICAL MARKET TRENDS SAN market is picking up. More 800 20% tenants and buyers are touringMARKET INDICATORS 18% the market than in previous 600 16% Q2 2012 Q3 2012 (forecast) quarters. Some properties 400 14% Vacancy Rate SF (000s) have been receiving multiple 12% 200 10% VACANCY offers to buy and lease which 8% has allowed owners to be 0 6% NET ABSORPTION more selective in negotiating -200 4% transactions. In addition, 2% CONSTRUCTION -400 0% there are several large users 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 RENTAL RATE in the market looking at Q2 existing spaces and comparing Net Absorption New Supply VacancyLEASE CONCESSIONS those with Build To Suit opportunities. There was only one Industrial building sale that closed escrow in Q2. It was a 14,177 SF bank owned property located at 417 Via Del Monte in the Oceanside Airport area.INDUSTRIAL/R&D VACANCY RATES Lease activity was excellent in the smaller multi-tenant projects with both newQ2 2012INDUSTRIAL/R&D VACANCY RATES CARLSBAD HISTORICAL MARKET TRENDS renewals. The smallerVISTA HISTORICAL MARKET TRENDS is a good transactions and lease tenants returning to the marketQ2 2012 sign that a broader based recovery is underway despite the challenges with the overall Carlsbad 13.5% unemployment rate in San Diego and the State. DiMaggio Maintenance signed a 5 year Escondido 5.6% lease for 10,000 SF at 3310 Via de la Valle. Oceanside Oceanside 14.1% FORECAST San Marcos 6.2% Oceanside occupancy will be hurt in second half of the year as Genica recently Vista 7.4% announced it would be relocating out of 145,000 SF in two buildings in the Prescott Industrial park and relocating to a 160,000 SF facility they purchased in Temecula. TheNorth County 9.8% property owners and the City of Oceanside worked hard to keep them but Genica was 0% 5% 10% 15% able to acquire a larger building at a very attractive price and consolidate under one roof. This increased their efficiency and lowered operating costs. There are a handful of buildings in escrow now in Oceanside. We are optimistic this activity will help shore up occupancy to offset the Genica loss. OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDSwww.colliers.com/carlsbad
  9. 9. AT A GLANCE | Q2 2012 | INDUSTRIAL | OCEANSIDETRANSACTION ACTIVITY - Q2 2012SALES ACTIVITY # PROPERTY NAME/ADDRESS BUYER TYPE SIZE (SF) SALE PRICE PRICE/SF 1 417 Via Del Monte Lola Gouge 14,177 $1,116,000 $78.72LEASING ACTIVITY # PROPERTY NAME/ADDRESS TENANT NAME SIZE (SF) TERM EFF RATE/SF 2 3310 Via de la Valle DiMaggio Maintenance 10,000 60 months $0.58/G This document has been prepared by Colliers International for advertising and general information only. Colliers prepared by ADAM MOLNAR, GREG LEWIS International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950 should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
  10. 10. Q2 2012 | INDUSTRIALSAN MARCOSAT A GLANCE INDUSTRIAL/R&D VACANCY RATES CARLSBAD HISTORICAL MARKET TRENDS VISTA HISTORICAL MARKET TRENDS Q2 2012 OVERVIEW San Marcos posted its fourth consecutive quarter of positive net absorption bringing industrial vacancy to 6.2%, which is down from 6.9% at the end of Q1 and near the lowest in North County. Low vacancy and positive absorption has helped stabilize lease and sale Oceanside prices and positioned San Marcos for rent and price growth. The San Marcos industrial Vista market is comprised on 491 buildings totaling 8.6 Million square feet with an average building size of 17,000 square feet. San Escondido Carlsbad Marcos Ocean ACTIVITY The majority of activity during Q2 OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS occurred in the smaller spaces with 300 9%MARKET INDICATORS the average transaction size of 6,000 8% 200 Q2 Q3 square feet and average lease rate of 7% 2012 2012 (forecast) $.68/SF Gross. Crescent Electric’s 100 6% Vacancy Rate SF (000s) 5% lease of 30,000 square feet at 295 0 4% VACANCY Distribution Street was the only lease -100 3% NET ABSORPTION transaction completed above 10,000 -200 2% square feet. With the completion of 1% -300 0% CONSTRUCTION this transaction there are only six 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q2 available spaces larger than 20,000 RENTAL RATE Net Absorption New Supply Vacancy square feet in the entire San MarcosLEASE CONCESSIONS submarket. Falmat purchased a 48,000 square foot building they had been leasing at 1810 Diamond for $88/SF. Action Auto Collision purchased 9,216 square feet on Rancheros for $102/SF. The City has drafted an updated industrial zoning ordinance to coincide with the General Plan that was adopted in February 2012. The new zoning designations are now consistentINDUSTRIAL/R&D VACANCY RATES with the General Plan and the code better defines allowable uses. The draft code can beQ2 2012 viewed at http://www.ourcityourfuture.com/working-documents. Additionally, construction INDUSTRIAL/R&D VACANCY RATES CARLSBAD HISTORICAL MARKET TRENDS Q1 2012 is near complete on the first phase of student housing located MARKET TRENDS District. The VISTA HISTORICAL in the University Carlsbad University District is entitled to provide the following uses: 14.4% Escondido 6.5% 1 Million square feet of street level and big box retail Oceanside 15.5% 950,000 SF of professional/medical officeSan Marcos San Marcos 2,600 residential housing units 6.9% 800 student housing units Vista 8.1%North County 10.6% FORECAST San Marcos is a supply constrained market that will see rate and price appreciation as a 0% 5% 10% 15% 20% result of continued demand. Owner-users and developers alike will have to look to vacant land to satisfy the need for larger blocks of space in San Marcos. OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDSwww.colliers.com/carlsbad
  11. 11. AT A GLANCE | Q2 2012 | INDUSTRIAL | SAN MARCOSTRANSACTION ACTIVITY - Q2 2012SALES ACTIVITY # PROPERTY NAME/ADDRESS BUYER TYPE SIZE SF SALE PRICE PRICE/SF 1 1810 Diamond Street Owner User 48,298 $4,250,000 $88.00 2 923 Rancheros Owner User 9,216 $945,000 $102.54LEASING ACTIVITY # PROPERTY NAME/ADDRESS TENANT NAME SIZE SF TERM EFF RATE/SF 3 295 Distribution Street Crescent Electric Supply 30,140 72 months $0.50 NNN 4 1020 Linda Vista Drive Ste B John Hargrove 7,040 60 months $0.60 GRS 5 1365 Grand Ave #100-104 Rampage Brewing Company 6,770 60 months $0.93 GRS 6 220 Bingham Drive #101 World Mission Society Church 6,329 24 months $0.63 GRS This document has been prepared by Colliers International for advertising and general information only. Colliers prepared by ADAM MOLNAR, GREG LEWIS International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950 should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.
  12. 12. Q2 2012 | INDUSTRIAL VISTA AT A GLANCE OVERVIEW A surge in Q2 tenant activity helps Vista cut its vacancy rate from to 8.1% to 7.39%. Five leases totaling 227,000 square feet of gross absorption accounted for the majority of Q2 activity and resulted in 75,000 square feet of net absorption. The Vista industrial market Oceanside is comprised of 530 buildings totaling 13 million square feet with an average building size Vista of 25,000 square feet. San ACTIVITY Marcos Ocean Carlsbad Vista’s leasing activity surpassed all other North County submarkets. Brown Safe led the way by leasing 65,000 square feet from real estate investment firm Pacifica Enterprises, Inc., who purchased the building vacant for $58/SF only three months earlier. MARKET INDICATORS Communications Test Design, Inc. (59K), Select Supplements (39K) and March Plasma (24K) all expanded or relocated from Carlsbad, while Electra Bicycle, an existing Vista Q2 Q3 tenant, expanded into 39,000 square feet. Lease rates during Q2 averaged $.55/SF NNN. 2012 2012 (forecast) Vista is benefited from limited supply in San Marcos and higher prices in Carlsbad. Even VACANCY though Q2 saw an increase in activity there is still a surplus of space available, 11 spaces to be exact, between 30-50,000 square feet. NET ABSORPTION FORECAST CONSTRUCTION Lease rates in the 30-50,000 square foot range will remain flat until occupancy RENTAL RATE increases, while spaces outside this size range could see more immediate rate increases. The recent trend of tenant migration from neighboring cities will likely continue as it LEASE CONCESSIONS becomes increasingly difficult to find space and/or match the value Vista offers. There has been an increase in build-to-suit inquires from tenants seeking space greater than 50,000 square feet due to lack of available options in North County. We expect pricing on good quality larger buildings to move closer to replacement cost.BAD HISTORICAL MARKET TRENDS VISTA HISTORICAL MARKET TRENDS INDUSTRIAL/R&D VACANCY RATES Q2 2012 700 10% INDUSTRIAL/R&D VACANCY RATES CARLSBAD HISTORICAL MARKET TRENDS VISTA HISTORICAL MARKET TRENDS Q2 2012 600 9% 500 8% Carlsbad 13.5% 7% 400 Escondido 5.6% Vacancy Rate SF (000s) 6% 300 5% Oceanside 14.1% 200 4% 100 San Marcos 6.2% 3% 0 2% Vista Vista 7.4% -100 1% North County 9.8% -200 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 0% 5% 10% 15% Q2 Net Absorption New Supply VacancySIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS OCEANSIDE HISTORICAL MARKET TRENDS SAN MARCOS HISTORICAL MARKET TRENDS www.colliers.com/carlsbad
  13. 13. Ol ea nd er Av e d ak R en O GreAT A GLANCE | Q2 2012 | INDUSTRIAL | VISTA La M irad aD r ve re A amo Syc Dr se lro Dr Me er nt Ce rk Faraday Ave Pa Ave ttia nse Business Pa r k Dr B Poi D Lionsh ead Ave Rd TRANSACTION ACTIVITY - Q2 2012 ort Airp mar Palo SALES ACTIVITY # PROPERTY NAME/ADDRESS BUYER TYPE SIZE SF SALE PRICE PRICE/SF 1 2510 Pioneer Avenue Owner User 13,140 $1,025,000 $78.01 Only one sale above 10,000 SF occurred during Q2 LEASING ACTIVITY # PROPERTY NAME/ADDRESS TENANT NAME SIZE SF TERM EFF RATE/SF 2 1081 Poinsettia Avenue Brown Safe Mfg 65,002 92 months $0.62 NNN 3 995 Joshua Way Ste A CTDI 59,144 36 months $0.51 NNN 4 2390 Oak Ridge Way Select Supplements 39,672 72 months undisclosed 5 3275 Corporate View Drive Electra Bicycle 38,808 60 months $0.61 NNN 6 2370 Oak Ridge Way Ste B March Plasma Systems, Inc. 24,592 60 months $0.54 NNN This document has been prepared by Colliers International for advertising and general information only. Colliers prepared by ADAM MOLNAR, GREG LEWIS International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party TUCKER HOHENSTEIN & MIKE ERWIN, 760 438 8950 should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from.

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