Market Stat: Every Retail Sector Recorded a Loss During the Quarter
Although retail occupancies in San Diego remain near a post-recession low and supply growth is limited, store closures over the past two years have impacted rent growth.
Retail rents fell during the second quarter in San Diego, as trailing 12-month rent growth reached its lowest level since 2012 at the midway point of 2019 at 0.8%. At the same time, San Diego posted one of the lowest annual rent growth rates in California.
Rents fell across every retail sector in the second quarter, recording the biggest quarterly drop since 2010, at -0.5%.
Mall space continued to lose ground, falling 1.6%, marking four out of the past five quarters with a rent loss. Rents in power centers fell for the second straight quarter, the only other retail sector to record falling rents in the past two quarters.
Few areas of San Diego were spared. Most of the county’s most expensive submarkets recorded the largest second quarter losses. Carmel Mountain, Carlsbad, Downtown, Mission Valley and UTC are only a few of the submarkets where rents fell more than 1%. The gentrifying neighborhood of Oceanside is one of only a few submarkets that did not record a quarter-over-quarter drop.
Annual rent growth is expected to slip into negative territory before the end of 2019, and settle below the historical benchmark through the forecast.
Article By: Joshua Ohl | CoStar | August 02, 2019
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