San Diego Office Recovery Gains Momentum

The San Diego office market is continuing to recover. In the third quarter, the market posted 269,000 square feet of positive absorption, marking the second consecutive quarter of growth, according to a new report from Colliers. Prior, San Diego had five consecutive quarters of negative absorption.

The office leasing demand in the third quarter reached levels not seen since 2018 and 2019, and according to the report, it is a sign that the office market has turned a corner. The activity has triggered new class-A development from major companies, like Kilroy Realty, American Assets Trust, and Lincoln Property Co. In June, Kilroy acquired a 1.3-acre land site for $42 million in Downtown San Diego to build a 275,000-square-foot office tower. The property is directly adjacent to the firm’s 220,000-square-foot 2100 Kettner development, illustrating the firm’s bullishness on the market. In total, there is 1.4 million square feet of new office space under construction.