Developers in San Diego Focus on Speculative Projects

Market Stat: Spec Projects Under Construction Account for 84% of Development Pipeline

AUGUST 23, 2019 | JOSHUA OHL | COSTAR

This summer, BioLegend’s 175,000-square-foot build-to-suit at the Carroll Tech Centerin San Diego's Mira Mesa/Miramar submarket wrapped up, allowing the biomed company to expand from its 70,000-square-foot space in neighboring Sorrento Valley.


It was the largest inventory expansion in San Diego’s largest industrial submarket in more than a decade. It was also one of the few industrial build-to-suit projects in the pipeline.

Of the 1.4 million square feet of industrial space under construction across San Diego, only 200,000 square feet of industrial and flex space is built-to-suit.


The largest built-to-suit is a 28,000-square-foot expansion at NuVasive’s campus at Sorrento Summit in Sorrento Mesa, that’s wrapping up. It was part of a renewal signed in 2017, accounting for nearly 250,000 square feet. The expansion provides more spillover space for amenities than for purely lab space.


Speculative projects under development accounts for 84% of the pipeline. Developers have seized upon San Diego’s steady demand for flex and logistics space, not to mention huge rent growth.


The largest project, and San Diego’s biggest speculative development this decade, is underway in Poway at Vantage Point. That 550,000-square-foot project could lure defense contractors interested in expanding along the I-15 corridor, and will expand Poway’s industrial inventory by 6% once it completes next year.


While inventory is unlikely to expand as significantly as 2018’s decade high in the coming years, the pipeline remains filled. After last year added 2.5 million square feet of net new supply, expanding inventory by 1.3%, 1.1 million square feet broke ground in the first half of 2019, matching construction starts from the first half of 2018.


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