San Diego Real Estate Market Reports

San Diego Office Market

The average monthly asking rate fell slightly from last quarter’s all-time high to $3.48/SF. The current rate is 1.8% lower than 12 months ago. Quarterly net absorption was essentially flat, posting a modest gain of 20,819 SF. Leasing activity remained slow, with a total of 1.1 MSF for the quarter. Total vacancy climbed to 19.8% as large deliveries introduced a large amount of new vacant space to the market. 1.2 MSF of new office space delivered this quarter, coming right on the heels of the first quarter’s record-setting 1.7 MSF of new deliveries. The pipeline has contracted significantly, with only 1.5 MSF of under-construction space remaining. Sublease availability totaled 2.5 MSF, in line with the 5-year average and representing 3.2% of existing inventory.

San Diego Industrial Market

The average asking rent fell to $1.44/SF NNN, down 4.2% over the past year. Asking rents have fallen from the historical peak in 2023 as leasing activity has slowed and vacancy rates have climbed. Total vacancy climbed to 7.8%, up 200 basis points over the past year and reaching a 10-year high after 10 consecutive quarters of net absorption losses. Net absorption posted 757,735 SF of losses for the quarter, bringing year-to-date net absorption to negative 1.3 MSF. Sublet availability climbed to an all-time of 3.6 MSF, driven by 499,000 SF of R&D space being listed for sublease in a Rancho Bernardo tech campus. 92,480 SF of new projects delivered, the lowest quarterly delivery volume in three years, as construction activity held steady at 1.4 MSF.

San Diego Life Science Market

Asking rents in the core submarkets declined to $5.48/SF NNN, down 5.9% over the past year. Net absorption was negative, posting 307,827 SF in losses for the quarter, bringing absorption losses for the last 12 months to 422,391 SF. Total vacancy climbed to 25.8%, an all-time high, up from 16.1% a year ago. 915,963 SF of new deliveries during the second quarter, combined with absorption losses, contributed to the high level of vacancy. Sublease availability remained elevated at 1.6 MSF. 427,000 SF of construction is currently underway in the core submarkets after the pipeline dramatically reduced over the past two years.