San Diego Office Market Report

Core conditions cloud overall performance. San Diego’s office sector enters this year notably bifurcated. Across suburban submarkets, collective vacancy is well below the long-term average. This is highlighted by steadfast tenant demand in North San Diego, which comprises the biotech strongholds of Sorrento Mesa, Torrey Pines and UTC. As the metro’s second-largest submarket by stock, the area represents one of the few locales nationwide with an office inventory larger than 25 million square feet and a vacancy rate below 10 percent. Anticipated expansions by life science firms and moderate supply pressure should preserve this standing in 2023. Elsewhere, Downtown San Diego is home to the highest CBD availability among major markets in the nation. The current active pipeline suggests vacancy here will further elevate over the near term, as 3.2 million square feet is slated for delivery in 2023, nearly 90 percent of which was available as of late last year. The Campus at Horton highlights this year’s CBD completions. However, a group of speculative projects along the downtown waterfront will also test demand for Class A space at a time when upper-tier vacancy exceeds 30 percent in the submarket.