San Diego Commercial Office Space for Rent

Q4 2025

San Diego Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The San Diego commercial real estate (CRE) market is characterized by bifurcation, with the Industrial sector showing resilience amid high demand from life sciences and logistics [1]. The Office sector is undergoing a protracted transition, with high vacancy and a strong shift toward centralized, high-quality spaces [1]. The overall CRE market condition is facing destabilization, a trend that began in mid-2022 [2].

TenantBase Proprietary Data [14] highlights the distribution of active tenant demand: Retail/Storefront dominated with 59.07% of all searches [14], Warehouse was the second most active sector at 31.22% [14], and Office accounted for 10.55% [14].

Office Market

Market Overview

San Diego's office market is defined by elevated vacancy, though recent positive absorption suggests stabilization is possible [1, 2]. Demand remains concentrated in Central County and North County submarkets [1].

  • Vacancy & Availability: The overall vacancy rate was 14.5% in Q2 2025 [1], and 14.3% in Q3 2025 [4]. Direct office availability sits at 16.4%, which is about 5% higher than the pre-pandemic rate [2].
  • Net Absorption: Net absorption for Q1 2025 was +66,142 SF, a turnaround from the negative absorption seen in late 2024 [2]. Year-to-date (YTD) net absorption was -246,787 SF as of Q2 2025 [1], though the market posted a modest gain of 9,046 SF in Q3 2025 [2].
  • Rental Rates: The average monthly asking rate was $3.48 per SF in Q3 2025 [2], and the median asking rate was $27 per year [1].

TenantBase Activity [14]

  • Demand Share: Office accounted for 10.55% of total search volume [14].
  • Lease Term Preference: Demand is highly polarized toward short-term flexibility [14]:
    • Less than one year: 57.14% of deals.
    • 2-3 Years: 23.81% of deals.
    • 3-5 Years: 14.29% of deals.
  • Size Requirements: Shorter commitments seek smaller spaces. The average lower SF required for a Less than one year term is 500 SF, compared to 1,750 SF for a 2-3 Years term [14].

Industrial & Warehouse Market

Market Overview

San Diego's industrial market remains resilient, primarily driven by logistics, aerospace, and life sciences [1]. The market is experiencing a period of supply digestion, leading to rising vacancy rates [1].

  • Vacancy & Rent: The overall vacancy rate reached 7.7% in Q2 2025 [1], and 7.5% in Q3 2025 [4]. The rate has climbed due to a YOY increase of 260 basis points (bps) [3]. The average asking rent fell 4.5% YOY to $1.48 per SF NNN in Q3 2025 [3].
  • Net Absorption: Direct net absorption was negative in Q3 2025, totaling -454,600 SF, contributing to a YTD figure of -1.7 million SF [3].
  • Leasing Activity: Lease transaction volume was 2.1 million SF in Q3 2025 [3].
  • Construction: Over 2.1 million SF is currently under construction, concentrated in areas like Otay Mesa and Carlsbad [3].

TenantBase Activity [14]

  • Demand Share: Warehouse accounted for 31.22% of total search volume [14].
  • Lease Term Preference: Demand is balanced across the mid-term range [14]:
    • 3-5 Years: 32.50% of deals.
    • 1-2 Years: 25.0% of deals.
    • Less than one year: 15.0% of deals.
  • Size Requirements: The average lower SF required for a 5+ Years term is 12,333 SF, significantly larger than the average for shorter terms [14].

Retail Market

Market Overview

The retail market is tightening in neighborhood centers but remains constrained by limited new development. Fundamentals are supported by stable consumer activity [4].

  • Vacancy & Availability: Retail vacancy was 5.1% in Q2 2025 [1] and rose to 5.4% in Q3 2025 [4]. This figure is above the 10-year quarterly average of 4.9% [4].
  • Net Absorption: Net absorption YTD reached -724,129 SF in Q3 2025 [4].
  • Rental Rates: The average asking rent declined slightly to $2.36 per SF in Q3 2025 [4]. The median asking rate is $27 per year [1].
  • Construction: The construction pipeline is minimal, expanding to 667,993 SF in Q3 2025 [4].

TenantBase Activity [14]

  • Demand Share: Retail/Storefront activity dominated with 59.07% of total search volume [14].
  • Lease Term Preference: Retail tenants show a strong preference for long-term stability [14]:
    • 3-5 Years: 24.29% of deals.
    • Less than one year: 21.43% of deals.
    • 5+ Years: 21.43% of deals.
  • Top Locations: Tenant interest is highly concentrated in the core cities [14]:
    • San Diego (Core): 11.81% of deals.
    • Chula Vista: 7.17% of deals.
    • Oceanside: 5.91% of deals.

Multifamily Market

Market Overview

San Diego's multifamily sector is stable, maintaining high occupancy despite a surge in new supply [1]. Strong renter demand is expected to continue absorbing new units [1].

  • Vacancy & Occupancy: The vacancy rate was 5.4% in Q2 2025 [1]. Overall occupancy inched up to 96.3% as of August 2025 [7].
  • Rents & Concessions: Average rent per unit was $2,528 in Q2 2025 [1]. Asking rents began to dip lower in Q3 2025, declining 0.6% year-over-year [1].
  • Construction: Approximately 9,974 units were under construction as of Q2 2025 [1]. About 6,200 units are on pace for delivery in 2025 [1].
  • Investment: Total sales volume reached $1.4 billion as of Q2 2025 [1]. The median price per unit is down 5% at $333,300 [1].

Sources

  1. San Diego Commercial Real Estate Market Report 2025 | Crexi
  2. The widening level of vacant commercial space available in SoCal — Q1 2025
  3. San Diego Industrial Market Report | Kidder Mathews
  4. SAN DIEGO - Cushman & Wakefield
  5. San Diego Multifamily Market Outlook | Chase - J.P. Morgan
  6. Multifamily - CBRE
  7. San Diego Multifamily Market Report – November 2025 - Yardi Matrix
  8. San Diego Retail Market Report | Kidder Mathews
  9. San Diego Retail Market Report
  10. 2025 Q1 San Diego North County, CA - Retail - Lee & Associates
  11. San Diego Multifamily Market Report | Kidder Mathews
  12. San Diego Real Estate Market Reports | Newmark
  13. San Diego Office Market Reports | Avison Young US
  14. TenantBase Proprietary Market Data (Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.