San Diego's Office Vacancy Rate Hits 9-Year High

When it comes to San Diego’s office market, there is good news and bad news. The good news: the metro’s robust life science and technology sector will help to fuel leasing activity this year and drive the office recovery. The bad news: the office vacancy rate is at a nine-year high, and new construction deliveries in Downtown San Diego will push vacancy rates higher this year.

Marcus & Millichap research shows the office vacancy rate in San Diego is 16.1%, a 380 basis point increase from 2019. The class-A vacancy rate is even higher at 20.8%. Marcus & Millichap expects the rate to continue to grow another 140 basis points this year to 17.1%, the highest rate since 2009. The cause is largely due to several speculative office developments scheduled to deliver in Downtown San Diego this year. The CDB already has a 26.2% vacancy rate, and the new construction will increase the stock by 2.3%. In addition, another 750,000-square-foot project is schedule to come to market in 2022.