JOB GAINS TO SUPPORT
STEADY RETAIL OPERATIONS IN SAN DIEGO

SAN DIEGO, March 17, 2010 – Renewed employment growth will firm retail demand in San Diego this year, and the delivery of new space will be modest, resulting in a minimal uptick in vacancy and a negligible decline in rents, according to the 2010 National Retail Report by Marcus & Millichap, the nation’s largest real estate investment services firm. A recovery will lag, however, in areas that have been most impacted by new stock in recent years, specifically the Northwest County and South County submarkets.

 “Investment activity in San Diego will be limited in 2010, although a rise in cap rates could pull some buyers off the sidelines as properties enter the market,” says Kent R. Williams, senior vice president and regional manager of Marcus & Millichap’s San Diego office.

Following are some of the most significant aspects of the San Diego Retail Research Report:

• Following the loss of more than 75,000 jobs since the onset of the recession, employers are expected to add 12,500 workers in San Diego this year, a 1 percent expansion.
• Developers are forecast to deliver 420,000 square feet of retail space to the metro in 2010, expanding inventory by 0.5 percent. Last year, builders completed 250,000 square feet.
• Absorption will be slightly positive this year, but deliveries will exceed tenant demand. As such, vacancy will tick up 30 basis points to 6 percent.
• Asking rents are forecast to fall 1.2 percent in 2010 to $27.29 per square foot, while effective rents are expected to drop 2.5 percent to $23.80 per square foot. Last year, asking and effective rents slipped 4.7 percent and 7.1 percent, respectively.

Also included in the report is the firm’s annual National Retail Index (NRI), a snapshot analysis that ranks 44 retail markets based on a series of 12-month forward-looking supply and demand indicators. San Diego moves up one place this year to No. 2. Washington, D.C., claimed the top spot in this year’s National Retail Index (NRI) for the second year in a row due to a low vacancy rate and healthy job growth. A lack of significant construction in recent years moved San Francisco up one notch to No. 3. Forecasted job growth elevated New York City four places to No. 4 and continued layoffs dropped New Jersey three places to No. 5, despite low vacancy and the state’s relatively steady economy.

For a copy of Marcus & Millichap’s National Retail Report and the complete NRI rankings, visit www.MarcusMillichap.com.

With more than 1,200 investment professionals in offices nationwide, Marcus & Millichap Real Estate Investment Services is the largest firm specializing in commercial real estate investment services in the nation. Marcus & Millichap closed 3,441 transactions in 2009, the highest of any commercial real estate brokerage firm. Founded in 1971, the firm has perfected a powerful system for marketing properties that combines product specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology and relationships with the largest pool of qualified investors nationally.

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