SAN DIEGO-Office absorption climbed and vacancy dipped during the second quarter, according to a new report by Burnham Real Estate. The company also reports that investment sales of office buildings remained brisk in the second quarter, helping to produce a total of more than $900 million in sales in the first half of the year.

The rising absorption and declining vacancies during the first half of 2005 translated into higher rents for the county, according to the Burnham report.”As the ‘quality’ available space continues to get leased and overall tenant demand remains steady, the San Diego office market is establishing a strong foundation,” says Mark Wayne, SVP and principal with Burnham.

The report shows that 940,000 sf of office space was absorbed in the first half of the year, with 510,000 sf of that absorption taking place in the second quarter. Should this pace continue, total absorption will place second to the rate in 2000, when demand for office space topped over 4.6 million sf. The central suburban and north city regions posted the most activity, with 550,112 sf and 356,245 sf absorbed, respectively.

Investment remains strong in San Diego County, with $900 million worth of office transactions closed in the first two quarters. According to Wayne, smaller office buildings or office condominiums are being sold to buyers who have previously rented space.

These 1,000-sf to 5,000-sf parcels are priced at approximately $300 per sf, but business owners are finding that, even at those prices, owning is more economical than renting, Wayne tells “You can take advantage of appreciation, pay down debt and it gives sole proprietors and small businesses the opportunity to invest,” he says.

Office vacancy in San Diego is currently at 11.9%, up from 11.7% at year-end 2004. Wayne tells that the increase in demand for office space comes not so much from increased employment rates but rather larger companies in search of more room. Eric Vann, senior associate with Burnham, expects the increased activity should put the county at a 10% vacancy rate by the year’s end, which would mark the third time in 15 years that vacancy rates dipped to near or in the single-digit range.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.



Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2023 ALM Global, LLC. All Rights Reserved.