San Diego office market begins steady post-COVID recovery
As the COVID-19 pandemic subsides and vaccinations levels increase in San Diego County, businesses have reopened with minimal restrictions. Many office tenants are now implementing plans to bring back their workforce – at least partially – to the office in the late-summer/early-fall. This will allow the office market to continue stabilizing and recovering throughout the year and into next year, providing increased space demand and rising rental rates. In Q2, average asking rental rates were beginning to rise. Additionally, the amount of space under construction has reached pre-2009 levels.
- After five consecutive quarters of negative net absorption, the San Diego County office market moved into positive territory with nearly 16,000 SF of net absorption in Q2 2021.
- Countywide overall vacancy increased 5 basis points (BPS) in Q2 to reach 14.24%. While overall absorption was positive, it was not enough to counter
nearly 73,000 SF of vacant new supply.
- Recovery from the COVID-19 pandemic led to some relief in sublease vacancy. As of Q2, sublease vacancy dipped 21 BPS down to 1.13% after topping 1.34% for the last two quarters.
- 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.