This past month we completed the appraisal of a larger retail building (Over 12,000 square feet) in the Hillcrest area of San Diego. Overall, we were impressed at how well the area has done during the recession. Gentrification into North Park over the past few years has continued along University Avenue with new gyms and restaurants serving the newer condominium projects and repositioned homes in the area. A recent lease in the area indicated that retail tenant improvement allowances were down by 50% from the market peak in 2007 (Moved from $30.00 SF to $15.00 SF), and that market participants were discounting the going in lease rate for the first year, then going into a rental rate that assumed stabilized (post recession) market conditions. As the speed of the San Diego economic turnaround is unknown, lease terms utilizing a CPI index rather than a fixed escalation rate are recommended.
Thank you, we'll be in touch!