Net Absorption is Negative and Overall Vacancy is Up
The COVID-19 pandemic has continued to cause negative office market demand due to some business closures as well many businesses enforcing work-from-home practices. Beginning this quarter, mass countywide vaccinations have made it possible for businesses to bring employees back to the office starting in Q3 or even as early as Q2. The pandemic has not negatively affected all office-users, as some large tech firms such as Apple and Google are taking advantage of the local high-quality workforce and expanding in the San Diego region.
- Net absorption continued to be negative for the fifth consecutive quarter, demand is likely to stabilize and potentially improve by year-end 2021.
- Countywide overall vacancy increased 80 basis points (BPS) in Q1 to reach 14.05% – the highest level since 2013.
- Increased demand for life science space has been bolstering the conversion of existing office space, which will mitigate any long-term vacancy trend over the next few years.