San Diego Office Market Report
Variance in Submarket Performance Generates
Mixed Outlook for San Diego’s Office Sector
Life science and contractor hub shines. San Diego entered April with a vacancy rate below 25 other major U.S. markets, with the performance of North San Diego largely to credit for this standing. Accounting for one-fourth of metro inventory, the area is home to the fourth-lowest vacancy among West Coast submarkets of similar or larger size. Spanning the past 24 months, tenants absorbed a net of 920,000 square feet here, lowering vacancy by 150 basis points. While biotech and government contractors accounted for a chunk of these commitments, medical office users also played a role, as the presence of UC San Diego Medical Center and Scripps Memorial Hospital facilitate demand for adjacent space. Should conditions remain locally strong, developers may move forward with proposals. Nevertheless, the local project delivery count over the next two years should be moderate based on the current pipeline.