Q2 2023 San Diego Industrial Market Report
Vacancy in San Diego hit a low in 2022 but is increasing in 2023 following negative absorption in the first two quarters. The addition of sublet spaces in 2023 has been a primary driver. While rent growth is above the long-term average, it has been moderating for four straight quarters. New leasing activity has decreased to a decade low as new supply continues. The biotech industry has seen a significant decline in demand, resulting in the largest lab space pipeline in a decade and over 1 million square feet of available space in the pipeline.
The pipeline in Otay Mesa near the Baja port of entry is primarily available for lease, with less than 2 million square feet of inventory, representing the most available industrial space in recent years. However, there is less concern due to demand in the border region.
Investor activity has declined due to economic uncertainty and rising interest rates. Institutional deals in Otay Mesa have closed at lower price points, but owner/user deals in 2023 have shown that buyers are willing to pay last year’s pricing to enter the border region.
The pipeline in Otay Mesa near the Baja port of entry is primarily available for lease, with less than 2 million square feet of inventory, representing the most available industrial space in recent years. However, there is less concern due to demand in the border region.
Investor activity has declined due to economic uncertainty and rising interest rates. Institutional deals in Otay Mesa have closed at lower price points, but owner/user deals in 2023 have shown that buyers are willing to pay last year’s pricing to enter the border region.