Mid-Size Users Drive Office Leasing

The office market in San Diego has closed its second best quarter in the last five years, with leasing activity driven by mid-sized office users and company expansions. According to research from Cushman & Wakefield, office vacancy fell to 12.8% in the second quarter—near the 12.4% vacancy rate in 2006—with 342,000 square feet of positive net absorption in the first half of the year. This activity has returned the market to pre-recession highs of leasing activity.

“With its best Q2 performance in five years, occupancy increased by 276,400 square feet in the second quarter of 2018, bringing overall growth through the first half of 2018 to 342,000 square feet,” Jolanta Campion, research director of San Diego at Cushman & Wakefield, tells GlobeSt.com. “Growth in the second quarter of this year was four times higher than in the first quarter, and also marked the 16th consecutive quarter of occupancy gains.” Campion says that mid-sized office users, and specifically tech and software companies drove the leasing activity during the quarter. Some of deals include AbacusNext, moving into 65,000 square feet at Eastgate Summit; Tocagen taking 39,000 square feet and Celgene taking 27,000 square feet at Genesis in Campus Point; and InhibiRX taking 34,000 square feet in Torrey Pines. But, the list goes on. “In Del Mar Heights, healthcare technology provider GreatCall relocated its headquarters to their newly custom-built 56,000 square feet space at Pacific Plaza while vacating their previous 29,000 square feet space in the building next door,” adds Campion. “Other notable occupancies include Southwest Antennas occupying 16,000 square feet in Rancho Bernardo, Interdigital moving into 14,000 square feet in Sorrento Mesa, and Robbins Arroyo’s purchase of a 24,000 square feet office building in Governor Park.”

Jolanta Campion