San Diego Industrial Market Report

Inventory growth absent from northern reaches of the metro. Home to the busiest commercial land border crossing in the nation, San Diego’s industrial sector plays a vital role in U.S.-Mexico trade and the movement of goods throughout Southern California. The metro’s importance in the supply chain will elevate once the new Otay Mesa East border crossing is finalized. Unfortunately, the project, which was initially slated for late 2024 completion, will not be finished until late 2025 or 2026. In anticipation of this facility, a group of developers broke ground on nearby projects that will come online this year. Most of the 1.3 million square feet scheduled for delivery here was available as of this February, positioning the area to record a noteworthy vacancy increase over the coming quarters. Elsewhere, the metro’s three other largest industrial zones by stock — northern portions of the county bordering either Interstate 15 or Highway 78 — will record minimal completions this year. The lack of new supply here should aid demand for existing spaces, ensuring San Diego’s overall rate of vacancy increase will notably trail last year’s 270-basis-point rise.