San Diego Office Investment Forecast
San Diego's Office Sector Outperforms Nearby Metros;
Tech-Related Expansions Fuel Recovery
Large-scale leases signal long-term confidence. Contrasting other Southern California markets, office vacancy in San Diego compressed by more than 100 basis points last year. A bevy of 50,000-square-foot-plus commitments by life-science and tech firms was largely to credit for the notable improvement in leasing velocity. Highlighting activity in 2021, Apple inked six agreements for floorplans in UTC and Rancho Bernardo that together totaled nearly 500,000 square feet. Additionally, medical device companies Tandem Diabetes Care and Becton, Dickinson and Company agreed to occupy a combined 400,000 square feet in Del Mar Heights. Expectations for office-using job creation to outpace last year suggests other sizable commitments may await the metro in 2022. As a result, submarkets outside of Downtown San Diego, where vacancy remains well above 20 percent, may see vacancy rates fall below their long-term averages as sparse deliveries in these locales steer prospective tenants to existing properties.