San Diego Real Estate Market Reports

San Diego Office Market

The average monthly asking rate increased to $3.50/SF, up 3.8% over the past year and an all-time high, driven by rising availability in newer, more expensive properties. Net absorption was negative for the first quarter, logging 102,633 square feet in losses as leasing demand and activity remained low. Total vacancy climbed to 18.9%, an all-time high fueled by large deliveries and negative absorption. A record 1.8 MSF of new office space delivered during the first quarter, most of it vacant and located in Downtown. Sublease availability totaled 2.4 MSF, down from last year’s all-time high of 3.2 MSF. Though, this modest decline in sublease availability was more than offset by increasing direct availability.

San Diego Industrial Market

The average asking rent fell to $1.45/SF, down 5.3% over the past year, as rising vacancy has weighed on asking rates. Total vacancy climbed to 7.3% as net absorption posted 373,966 SF in losses for the first quarter. Vacancy is at its highest rate since 2014. Sublet availability fell to 3.0 MSF, down 412,359 SF from the all-time high set last quarter. 256,796 SF of new projects delivered in the first quarter as under-construction activity fell to 1.3 MSF, down from 2.9 MSF in the first quarter of 2024. Developers are starting few new speculative projects as market demand has failed to keep up with new supply for nine consecutive quarters.

San Diego Life Science Market

Asking rents in the core submarkets declined 2.7% over the past year to $5.75/SF. Rising vacancy rates and elevated sublease availability over the past two years have put downward pressure on landlords. Net absorption was modestly positive at 82,202 SF for the fourth quarter and 276,042 SF for the year but was outpaced by 774,345 SF of new space that delivered throughout the year. Total vacancy was at 16.3%, slightly down from last quarter’s record high of 16.7% but 200 basis points higher than the end of 2023. Sublease availability fell at the end of the year, mostly due to sublease listings that failed to transact being withdrawn from the market. 2.5 MSF of construction is currently underway in the core submarkets and a further 1.2 MSF of projects are underway in the emerging submarkets.