San Diego Office Market Report
Biotech Hubs Support Positive Absorption; Investors Exhibit Confidence in Long-Term Demand
Metro takes initial steps toward recovery. Spring and summer leasing activity suggests office demand has turned positive in San Diego. From April through June, 540,000 square feet of space was absorbed, with preliminary data from the third quarter showing nearly 30 lease executions for floor plans larger than 10,000 square feet. Demand has been strongest in North San Diego, where Element Biosciences recently agreed to occupy 38,000 additional square feet in Sorrento Mesa and Apple subleased 73,000 square feet in UTC. Moreover, three leases totaling 140,000 square feet were executed this summer at nearby Eastgate Mall. While leasing has improved, hurdles toward a broader recovery remain. Entering September, metro vacancy was significantly above the prior five-year average and the number of office-using jobs trailed the total recorded at the onset of 2021.