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
13.4% vacant
Balanced ≈ 8 to 12% · running high
Still soft, and downtown (about 33% vacant) is the epicenter, tenants are signing smaller, shorter deals. Vacancy held flat for a second straight quarter and almost nothing new is being built, so it looks to be plateauing.
Industrial
7.4% vacant · $1.47 NNN
Balanced ≈ 5 to 7% · running a bit high
Edged just past balanced as recently delivered space leases up. Asking rents ticked up 1.4% last quarter but are still slightly below a year ago. Otay Mesa holds most of the new supply, including a 612K SF park delivering this fall.
Life science / lab
28.1% vacant
Balanced ≈ 5 to 10% · deeply oversupplied
San Diego's signature sector overbuilt. More than a quarter of lab space sits empty after a wave of new Class-A deliveries. The upside: nothing new is under construction now, so the multi-year digestion has started.
Retail
4.4% vacant
Balanced ≈ 5 to 7% · tight
The quiet winner. Almost nothing new is being built, so existing centers stay full and rents grind slowly higher (about $2.37/SF, up 1.4% in a year). Cap rates near 5.5%. A genuine landlord's market.
Apartments (5+ units)
5.5% vacant · about $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 got more expensive again into October (the 10-year Treasury is above 5% and mortgage rates hit their highest since 2023), the Fed is signaling higher-for-longer, and a wall of 2025 to 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, now looks like a mid-to-late 2027 story at the earliest, tied to the rate path. By segment: office is grinding toward a slow, bifurcated bottom; life science faces a multi-year digestion; industrial is working through its last wave of new supply; 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.
Looking at 2 to 4 units instead?
Run any San Diego duplex, triplex, or fourplex through the "Does it pencil?" investment calculator, cap rate, cash flow, and the honest verdict.
Open the multi-family analyzer →

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 drifted slightly past 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 13.4% on institutional brokerage data as of mid-2026 (Kidder Mathews, 2Q 2026), elevated versus a balanced 8 to 12%, but healthier than many major U.S. metros. Downtown is the weak spot at about 33% vacant; suburban submarkets are much tighter.

Sources: Kidder Mathews San Diego reports, 2Q 2026 (office, industrial, apartments) and 3Q 2026 (retail); Savills San Diego Life Sciences, 2Q 2026. A market read, not investment advice. Market Journal IQ refreshes these each quarter.

×

Add MJIQ to your Home Screen

First, make sure you’re in Safari, not Chrome or an in-app browser.

1. Tap the Share iconat the bottom-center of Safari (a square with an arrow pointing up).

2. Scroll down and tap Add to Home Screen.

3. Tap Add, the MJIQ icon appears on your home screen.