San Diego Office Market Report

Flight-to-quality evident in local hubs. The performance of San Diego’s office sector continues to be skewed by elevated vacancy in its downtown. Here, roughly 33 percent of existing office space was available at the beginning of this year, the highest percentage among the nation’s major CBDs. As such, a nearly 2,000-basis-point disparity exists between local downtown and suburban vacancy. Fortunately, demand metrics are improving. Driven by an increase in Class A leasing, downtown registered positive net absorption in each of the past two years. In 2026, a lack of urban deliveries and the conversion of a vacant high-rise into apartments could help reduce vacancy. Elsewhere, collective vacancy is more manageable at roughly 14 percent. Like the CBD, suburban submarkets have registered a recent uptick in Class A leasing, with demand for high-quality office space most improved north of San Diego proper along Interstate 5. In 2026, the flight-to-quality among certain tenants is expected to continue. This, along with a significant pullback in local office construction, will play a role in the metro’s overall vacancy rate compressing for the first time in five years.