Downtown San Diego’s retail real estate continued its post-recession recovery in 2012, registering single-digit vacancy for the first time since 2008, according to a new report by the brokerage firm Cushman & Wakefield.

Nearly all downtown neighborhoods experienced increased retail leasing activity in the past year, spurring total positive net absorption of 109,460 square feet — nearly double the 57,959 square feet of absorption seen in 2011. Two years of positive net absorption — more space being occupied than vacated — have dropped the overall downtown retail vacancy rate to 8.6 percent, down from 11.6 percent in 2010 and 10.7 percent at the end of 2011.

“While there is still residual economic uncertainty and tenant fallout from the last five years, we are definitely seeing a renewed confidence in the downtown San Diego market,” said Bill Shrader, senior director and founder of the Cushman & Wakefield Urban Property Group, in a statement.

“The biggest challenge for the retail market continues to be the limited activity of multitenant retailers, as the urban market has been dominated by independent entrepreneurial operators, primarily restaurants,” Shrader said.

Half of the downtown San Diego neighborhoods reported retail vacancy rates under 6 percent in 2012, including Little Italy (5 percent) and the Gaslamp Quarter (5.3 percent). The vacancy rate at Horton Plaza was 5.8 percent at the end of 2012, and 12.5 percent in East Village.

— SDBJ Staff Report