Q3 Industrial Market TrendsNovember 18, 2014
The Carlsbad industrial market consists of over 14.2 million square feet (SF) of inventory and has added nearly 1.2 million SF of product from 2006 to 2009. The market is broken down into four individual product types: research and development (R&D), manufacturing (MFG), distribution (DIST), and industrial multi-tenant (IMT). Three of these product types recorded gains in occupancy in the third quarter. R&D had the most success with 47,737 square feet of net absorption in the third quarter, followed by 41,890 square feet for the IMT market. The IMT market has had its sixth straight quarter of strong absorption, indicating a steady sign that the small business sector of the local economy is booming.
The pace of absorption in Carlsbad has reached pre-recession levels, with the average annual absorption of 197,000 SF since 2012. With increasing absorption growing in the Carlsbad industrial market there has been nearly 159,000 SF of net absorption recorded year-to-date, with over 41,000 SF in the 3rd quarter. The Carlsbad market has consumed over 321,000 SF since the start of 2013, reducing the direct vacancy rate from 12.4% down to 10.3% by the end of the third quarter.
Wrapping up 2014, Carlsbad is expected to see improvements in market fundamentals, sustained by consistent signs of economic stabilization. Industry clusters expected to lead the growth include life sciences, information communications technology, clean tech, medical device and action sports companies. In the third quarter, new commitments for space include Spectrum Assembly Inc (50,000 SF – advanced education), Lifecore Fitness (21,753 SF – fitness equipment), Mira Costa College (22,627 SF – advanced education) and Dr.Own, Inc. (20,398 SF – medical equipment). With such a diverse industry group, the Carlsbad market will continue to bolster well into 2015.