However modest in size, downtown San Diego's office market has attracted its share of institutional and international investors. The biggest owner is The Irvine Co., which owns a half-dozen office properties in the market. The Newport Beach, Calif.-based developer and investor developed much of Orange County in the past four decades.

The biggest deal in recent months is the $161 million sale of the 306,750 sq. ft. DiamondView Tower to Wereldhave USA, the American unit of a publicly owned Dutch investor. In 2007, Wereldhave made its first San Diego purchase, buying the 655 West Broadway building for $210 million. The DiamondView is walking distance to the Gaslamp District.

Another major downtown landlord, the City of San Diego, is planning large-scale construction on a new Civic Center complex in the dilapidated central area, the location of current city government. In October, city officials selected Portland, Ore.-based developer Gerding Edlen to build a 1 million sq. ft., 41-story city hall, plus several surrounding buildings and parks.

Financial analysis shows that the city could save up to $400 million over 50 years by consolidating all its office requirements into the new complex. No construction dates have been set.

Recovery should occur in San Diego earlier than in other California cities, according to Ffrench, who offers a bold prediction: “San Diego will be the first major city in California to emerge from the recession.” The reason, he explains, is a diverse economy, in which high-tech and biotech play starring roles.

Morris Newman is a Los Angeles writer.

SAN DIEGO - BY THE NUMBERS

LARGEST PRIVATE EMPLOYERS

1. Sharp Health Care
   13,872 employees

2. Scripps Mercy Hospital System
   11,000 employees

3. Kaiser Permanente
   7730 employees

Source: San Diego Transcript/Citizendium

CITY POPULATION
2.9 million
Source: U.S. Census Bureau

UNEMPLOYMENT RATE:
6.5%
Source: Bureau of Labor Statistics

METRO AREA VITAL SIGNS

Office:

13.9% vacancy, 3Q 2008

12.9% vacancy, 3Q 2007

$26.51 rent per sq. ft., 3Q 2008

$26.09 rent per sq. ft., 3Q 2007

Source: Reis