Report: San Diego Office Leasing Slows
May 5, 2010
By: Nancy Dolce

Although the San Diego economy shows signs of strengthening and overall office market indicators point toward stabilization, leasing activity slowed dramatically during the first quarter of 2010, according to a recent Studley report. Overall leasing equaled 927,953 square feet, 27.8% less than the previous quarter but 8.9% more than a year ago.  ...

... "Class A deal volume was particularly anemic, reaching only 421,295 square feet, a quarterly decline of 36.5%," says Mike Labelle, senior vice president and co-branch manager of Studley’s San Diego office. "The market has yet to see the pervasive flight-to-quality that generally kicks off a recovery and, with space still in ample supply, most tenants see little need to rush leasing decisions." ...

... According to Studley, tenants continue to streamline operations. According to the report, for those tenants who have executed transactions, the focus continues to be on reducing operating costs and minimizing out-of-pocket expenditures. Many firms, whether relocating or restructuring an existing lease, are consolidating into more efficient layouts. "Additionally, companies are hedging their bets and opting for shorter-term leases, a strategy that aligns with many landlords’ interests, who hope that the market rebounds in a couple of years," notes T.D. Rolf, a Studley vice president who co-manages the San Diego office. ...

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