MARKET JOURNAL IQ

San Diego Commercial · Quarterly

The San Diego commercial market, read straight

Office, industrial, retail, life science, and apartments — where each segment actually stands on vacancy and rent, whether it favors landlords or tenants, and where it's headed. No spin, sourced, refreshed each quarter.

San Diego commercial real estate isn't a single market — it's five segments moving in different directions right now. Two are landlord-tight; three are working off a hangover from the last building boom. Here's the straight read, as of the latest available quarter. Each card shows current vacancy against the range that signals a balanced market, so you can see at a glance whether it's tight or soft.

Office
13.6% vacant
Balanced ≈ 8–12% · running high
Still soft, and downtown is the epicenter — tenants are signing smaller, shorter deals. Vacancy is essentially flat now, just off its cycle highs, so it may be plateauing.
Industrial
~7% vacant · ~$1.40 NNN
Balanced ≈ 5–7% · back to normal
Cooling off a historic run — asking rents have slipped ~3% over the past year (sixth straight quarterly dip), yet vacancy is still low by any long-term standard. Otay Mesa holds most of the new supply.
Life science / lab
26.9% vacant
Balanced ≈ 5–10% · deeply oversupplied
San Diego's signature sector overbuilt. A wave of new Class-A lab space delivered with little pre-leasing — a cycle-high vacancy that will take years, and real concessions, to digest.
Retail
4.5% vacant
Balanced ≈ 5–7% · tight
The quiet winner. Almost nothing new is being built, so existing centers stay full and rents grind slowly higher. A genuine landlord's market.
Apartments (5+ units)
5.5% vacant · ~$2,450/unit
Balanced ≈ ~5% · right at balance
Steady. Vacancy edged up as new units delivered, but strong absorption and job growth are holding rents roughly flat-to-up. Metro cap rates sit near 4.7%.

The outlook: Near term, expect a trough-and-wait stretch — debt stays expensive, the Fed is signaling higher-for-longer, and a wall of 2025–2027 loan maturities keeps forcing distressed sales, so transaction volume stays soft and price discovery grinds on. The real inflection — cap rates easing, deals flowing again — is most likely a 2027 story, tied to the rate path. By segment: office is grinding toward a slow, bifurcated bottom; life science faces a multi-year digestion; industrial is finding its floor; retail keeps grinding in landlords' favor; and apartments stay steady, with yields improving mainly as debt gets cheaper. (A market read, not a forecast to bank on.)

Why these numbers may differ from what you see elsewhere. Commercial vacancy swings a lot by who's counting. We use the institutional brokerages that survey a defined, competitive inventory — so figures read lower and more consistent than the broad aggregators that sweep in older, smaller, and owner-occupied buildings. We'd rather be comparable quarter to quarter than chase the scariest headline number.
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Frequently asked

Is San Diego commercial real estate a buyer's or seller's market in 2026?

It depends entirely on the segment. Retail and apartments are landlord-favored (tight vacancy, little new supply); industrial has normalized to roughly balanced after a record-tight run; and office — especially downtown — and life science are tenant-favored, with vacancy well above healthy levels. Across the board, high borrowing costs and a wave of loan maturities have slowed sales and are the main driver of pricing right now.

What is the office vacancy rate in San Diego?

Roughly 13.6% on institutional brokerage data as of early 2026 — elevated versus a balanced 8–12%, but healthier than many major U.S. metros. Downtown is the weak spot, with vacancy that ran above 30% at its worst; suburban submarkets are much tighter.

Sources: Kidder Mathews (office, industrial, retail, apartments) and Savills (life science), San Diego — latest available quarter. A market read, not investment advice. Market Journal IQ refreshes these each quarter.

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