It appears that San Diegans go to craft brewers located in industrial parks, put on weight, then go to to a fitness centers in industrial parks to shed that excess blubber. These are two reasons that San Diego has the lowest industrial vacancy rate in recorded history — 4.2 percent, according to Colliers International, which keeps tabs on real estate statistics.
“Plain old industrial buildings are fading away — being converted to other kinds of uses [including] craft brewing firms by the hundreds,” says Alan Nevin, research director at Xpera Group. “This is driving down vacancy rates and driving up lease rates. Old tacky industrial space that was 75 cents a square foot is now $2 a square foot,” often after rehabilitation. Brewers locate in industrial parks because parking clears out at 5 p.m when customers arrive to imbibe.
Brewers are filling industrial parks, and so are “gyms, personal training centers, fitness facilities,” says Ken Robak, executive vice president of Pacific Coast Commercial. “Not a significant supply has been created and demand is up.” In the last two years, lease rates have gone up 20 percent in the squeeze, he says.
Leases have also lengthened. Nick Mane of Pacific Coast Commercial says, “Most owners [of the properties] want a three- to five-year lease term. In my five years, I have never done anything less than one year.”
This is a problem for Bill Schwenker, founder and owner of Carturner, which makes devices that turn autos around, used by dealers and people with difficult driveways. Carturner was given the boot from a Vista location because he wouldn’t sign a three-year lease. His company is growing rapidly, he says, “and I don’t want to be locked in for three years and find that the space has become too small." He would like a lease of six months, perhaps out to a year, for maximum flexibility. But real estate brokers want to provide him three-year leases. He believes that’s because they want to maximize their incomes on the deal.
But Schwenker won’t get a six-month lease, says Nevin. The supply-demand squeeze has meant that “It’s difficult to find industrial space, even down at the border." Landlords can call the tune. Schwenker doubts that the vacancy rate is as low as Colliers says it is, but Nevin says it is the real deal. The market is tight.