San Diego Industrial Market Report

South Bay remains epicenter of supply additions. San Diego continues to grapple with an influx of speculative deliveries that have lifted vacancy to a 10-year high as of June. Specifically, developers completed 9 million square feet metrowide from 2021-2023, a total that surpassed the combined delivery volume from the prior nine years. During the first half of 2024, an additional 1.1 million square feet was brought to market. Most of this new supply has been concentrated in South Bay — specifically Otay Mesa — where vacancy is nearing the 10 percent mark. As the metro’s largest submarket by stock, this local upward momentum is skewing overall fundamentals, as are similar conditions in the second-largest area by inventory, North San Diego. When removing these submarkets from the equation, however, vacancy is significantly tighter across the metro’s remaining 103 million square feet of inventory, at 4.9 percent.