Vacancy dips below pre-recession levels. Home to a sizable life science presence and a collection of defense and tech-related companies, San Diego hosts a diverse tenant base that has supported solid demand for office space this cycle. The metro enters 2020 following a year of solid leasing velocity that reduced vacancy to a cycle-low level. Since peaking at 18.7 percent in 2009, vacancy rates have declined steadily, reinforcing the market’s appeal to businesses. Despite strong demand, speculative development is restrained as most of more than 1 million square feet slated for delivery this year is pre-leased. A U.S. Navy headquarters in downtown San Diego and Cubic’s facility in Kearny Mesa highlight the list of upcoming completions. Additionally, Apple has inked leases for three properties near La Jolla, one of which will be completed this year. A lack of additions of new space coupled with traditional office-user growth will further reduce the volume of available floor plans. As vacancy falls to the low-12 percent band, asking rents climb at a healthy rate, pushing the metro’s average roughly $3 per square foot above the prior cyclical high.