San Diego office market reports
The San Diego office market continues to experience a positive increase in touring activity at a slow but steady pace to start the year from tenants that had previously held off their office leasing search due to the COVID-19 pandemic. Employers are now eager to capitalize on the generous concession packages and flexible terms offered by landlords to accommodate their return-to-work policies.
The San Diego office market has consistently added approximately 1 million square feet on an annual basis since 2018 to their inventory. An additional 4 million square feet is projected to be delivered in the coming years as developers continue to expand on new developments throughout the various submarkets.
San Diego has experienced more than 1.2 million square feet of positive absorption over the past 4 quarters as companies continue to expand on their square footage needs. At the end of Q1 2022 net absorption rate posted 8,721 sf of positive absorption.
Direct Asking Rent
Average Full Service asking rents have continued to increase each quarter since Q1 2021 after remaining flat in Q3 and Q4 2020 during the pandemic at $2.93 psf. Lease rates were the highest in the North Central County submarket, with an average asking rate of $4.16 psf for Class A office space.
The total available office spaces remain at just a little over 17 million sf for the quarter. The existing direct availabilities have remained stagnant since Q3 2021 at 15 million sf, while the sublease availabilities increased by 300 thousand sf for a total of 1.9 msf at the end of Q1 2022.
The overall vacancy decreased by 30 basis points in Q1 and has continued to decline since Q2 2021. The direct vacancy rate and the sublease vacancy rate have decreased to 12% and 0.90% of the total market inventory, respectively compared to the Q1 2021 total vacancy rate of 13.4%.
The sales volume in San Diego decreased by 76.7% since the end of last year, while the price psf decreased 39.5%. The average sales price in Q1 2022 was $262 psf, a decrease of 36.3% compared to Q1 2021 when office buildings were trading for $411.98 psf.
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Get in-depth office market reports and insights from commercial real estate experts in the Greater San Diego area. Avison Young advisors look at San Diego commercial real estate activities and the latest San Diego statistics to provide you expert market research on San Diego's office properties.
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