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Market Report

San Diego Office Market Report

4Q 2023

Suburban Asking Rent Exceeds CBD Rate for Sixth
Straight Quarter, Reflecting the New Office Dynamic

Flight-to-quality still apparent in North San Diego. Demand for suburban office space in San Diego remained regionally above-average at the onset of July, with vacancy outside the CBD ranking as the second lowest among major California markets. The performance of North San Diego continues to be a driving force. Here, biotech and professional services firms are willing to pay a premium for top-tier space. As such, the submarket now ranks as the metro’s highest cost area for office space — recently dethroning the I-5 Corridor. This has allowed North San Diego’s vacancy, 11.9 percent in June, to hold well below the metrowide mean. The local rate also stands out on a national scale, as it ranks as the 10th lowest among nearly 100 U.S. submarkets with more than 25 million square feet of stock. The area is well positioned to maintain or possibly improve its ranking, as local supply additions are minimal this year and some existing space is temporarily removed from stock via office-to-lab conversions.
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