Residential Building Permit Values Up 21 Percent, Commercial Down 9.8

July 5, 2010
From January through May, local construction continued a slow recovery from a lingering slump, with the overall value of San Diego County residential and commercial building permits rising 7.8 percent from the same period of 2009.

However, figures released June 24 by the Construction Industry Research Board show credit for the rebound goes mostly to residential building.

In what’s become a familiar pattern so far this year, the value of residential building permits – for the construction of new single and multifamily housing, as well as alterations and additions — rose 21.5 percent through the end of May compared with a year ago.

Meanwhile, the commercial side — including permits for office, retail and industrial building and renovations — dropped 9.8 percent.

Experts note the overall value of new construction so far this year—– just over $710 million — is far below levels seen in 2005, when San Diego County had more than $2.2 billion in activity from January to May. No dramatic rebound is expected for the rest of 2010, especially for commercial building.

“It’s probably going to ride along the bottom for the next few months,” said Colton Sudberry, president of Sudberry Properties in San Diego, which develops and manages retail and mixed-use projects. “You could start to see some retail projects being developed by early next year, or later this year.”

Sudberry said financing in the retail development arena is gradually improving, and there are tenants in the market looking to make deals, which could spur development of smaller shopping center projects. Apartment building could also pick up in coming months, as local rents remain stable and overall supply remains tight compared with other communities.

Limited New Office Construction

However, he said there’s little sign of rising demand for new office product, with overall vacancy rates in that sector remaining high and tenants enjoying historically low rents amid an oversupply of local space. New office and industrial construction will likely remain limited to larger tenants looking to meet very specialized needs not addressed by available properties, Sudberry said.

By LOU HIRSH
San Diego Business Journal