San Diego Retail Market Report

Metro poised for another year of moderate vacancy adjustment. San Diego entered 2025 on a three-year stretch of sub-5 percent vacancy, largely due to tenant demand in Central San Diego. Accounting for 30 percent of the metro’s inventory, this submarket — which includes downtown, Mission Valley and beach communities — has the lowest vacancy of California submarkets with at least 20 million square feet of retail stock. Near term, available space in the area should remain minimal, as its active pipeline is scant and a long-vacant, 260,000-square-foot building was demolished earlier this year. The preservation of tight conditions here will prevent a notable shift in metrowide vacancy from occurring in 2025. Beyond this year, Central San Diego retailers, specifically those reliant on tourism, are in a favorable position. Over the next two years, the number of cruise passengers boarding in San Diego will double, as Royal Carribean and Norwegian Cruise Line each homeport here for the first time.