San Diego Office Market Report

Disparity between downtown and suburban vacancy poised to expand. San Diego’s office sector closed out 2024 with its highest year-end vacancy rate since 2009. Still, reasons for optimism exist. The metro’s downtown registered its strongest year on record for net absorption during 2024, led by an improvement in Class A demand. Meanwhile, San Diego’s suburbs noted positive absorption, albeit slight, across property tiers, preserving a collective vacancy rate outside the CBD that is nearly on par with the long-term average. Noteworthy absorption across different locations and property tiers suggests the recent rise in vacancy is the byproduct of speculative supply additions. This dynamic will continue to impact local fundamentals in 2025, specifically downtown. More than 1.2 million square feet is slated for 2025 delivery here, including four buildings along the waterfront that were 90 percent available as of January. In the suburbs, roughly 1.1 million square feet is scheduled for completion; however, all of this space is accounted for.