2022 Q2 Industrial San Diego Region
Key Takeaways
- Countywide average asking monthly rental rates increased by $0.01 in Q2 to $1.47/SF triple-net (NNN).
- Overall vacancy fell 24 basis points (BPS) to 2.45%, continuing the trend of the lowest vacancy rate ever recorded.
- Pure industrial vacancy fell below 1.5% for the first time ever while flex vacancy dropped below 5%.
- Over 1.6 million SF of new construction was completed in the first half of the year. The South County market made up three-quarters of the space completed.
San Diego’s industrial demand constrains vacant space options
The industrial and flex property segments continue to exceed historical demand levels, pushing vacancies to low single-digit levels. As of Q2 2022, industrial and flex vacancy rates stood at 1.45% and 4.96%, respectively. The extreme tightening of vacancy has resulted in average asking rents increasing by nearly 19% over the past year; when flex space is included, average rents have increased by 7%. Flex demand has been strong in life science/wet lab space where office conversions continue to create the most viable options for addressing demand and increasing inventory. Additionally, two-thirds of the new firstgeneration space under construction is devoted to life science/wet lab uses.
