San Diego Q3 2022 Office Market Report

New leasing activity had been averaging more than 2 million SF quarterly since mid-2022. In terms of square-footage, the average lease signed over the past 12 months is roughly 10% smaller than the average signed in the four years prior to the pandemic. The UC San Diego area continues to receive attention from biotech and high-tech firms. Bristol Myers Squibb preleased 427,000 SF at Alexandria Point in UTC earlier this year, which will be an expansion of more than 100,000 SF of its current footprint here. Biotech firms are increasingly pivoting to Del Mar Heights/Carmel Valley, a natural extension from the UC San Diego area and Sorrento Mesa.

Downtown is burdened by the region’s highest availability (6,080,045 SF / 36.2%) and vacancy (3,502,077 SF / 24.5%) rates among primary office submarkets in San Diego. Regarding construction, San Diego has more speculative office space under development than at any other time in the past decade, and very little of the 3.3% of total inventory that is being built is preleased.

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