The following reflects San Diego industrial market conditions as of Q3 2026.
MARKET DRIVERS
The San Diego industrial market recorded positive 205.7K SF of direct net absorption in 3Q26, reversing the negative 272.1K SF recorded in 2Q26. Cumulative direct absorption reached 776.5K SF through the first three quarters of 2026, compared with negative 1.2M SF through the same point last year, indicating a meaningful improvement in occupancy trends despite elevated availability.
Total vacancy declined 20 basis points (bps) quarter over quarter to 7.2% in 3Q26 and was unchanged from the same time last year. Total availability held steady over the quarter at 11.1% but remains 80 bps higher year over year. The quarter included 847.2K SF of new deliveries, yet vacancy still moved lower, suggesting that positive absorption helped offset the impact of newly completed space.
Lease transaction volume totaled approximately 2.0M SF in 3Q26, down from the prior quarter and below the 2.3M SF recorded in 3Q25. Year-to-date leasing activity reached 7.1M SF, 5.2% below the level recorded through the same point in 2025. Asking rents remained at $1.47 PSF NNN, unchanged from both last quarter and one year ago, as landlords continue to compete for tenants amid elevated availability.
Industrial investment sales activity accelerated in 3Q26, with 1.8M SF trading across 51 transactions totaling $430.7M in dollar volume. Year-to-date sales volume reached 4.7M SF, up 41.6% from the same point last year, while average quarterly pricing reached $272.08 PSF. The increase in transaction volume indicates that buyers remain active for well-located industrial assets even as underwriting remains selective.
ECONOMIC OVERVIEW
In August 2026, San Diego MSA manufacturing employment totaled 110.4K jobs, down 0.1% YOY, while trade, transportation, and utilities employment increased 0.5% to 217.7K jobs, indicating relatively stable industrial-related employment.
San Diego County’s unemployment rate rose to 4.9% in August, up from 4.7% in July but below California’s 5.1% rate. Despite softening labor conditions, the region’s diversified economy continues to support long-term industrial and logistics demand.
NEAR-TERM OUTLOOK
San Diego’s industrial market showed signs of stabilization in 3Q26, as improving occupancy trends helped offset significant new supply despite continued tenant selectivity. While leasing activity remains below last year’s pace, positive absorption and declining vacancy suggest that market conditions are gradually improving rather than experiencing a broad-based recovery.
Recent activity reflected this selective environment. Notable leases included AO Reed’s 100.6K SF commitment in Vista and General Atomics’ 61.8K SF lease in Rancho Bernardo, while several other major transactions involved renewals in Otay Mesa, Mira Mesa/Miramar, and Oceanside.
Investment activity included the $45.0M sale of Carlsbad Research Center and the $31.0M sale of 901 Bay Marina Drive in National City, highlighting continued investor interest in established industrial locations. Meanwhile, the completion of the 612.2K SF first phase of Otay Business Park added substantial speculative space targeting cross-border logistics demand.
Looking ahead, the construction pipeline has narrowed to approximately 423.6K SF, signaling a moderation in new supply. Although elevated availability should continue to favor tenants, improving occupancy and a smaller development pipeline could support gradual stabilization as recently delivered space is absorbed.
Frequently Asked Questions
What was the industrial vacancy rate in San Diego in Q3 2026?
The San Diego industrial total vacancy rate was 7.2% in Q3 2026, according to Kidder Mathews research. That is down 20 basis points from 7.4% in Q2 2026 and unchanged from Q3 2025. Vacancy declined even though the quarter included 847.2K SF of new deliveries (Data source: CoStar).
What is the industrial availability rate in San Diego for Q3 2026?
The San Diego industrial total availability rate was 11.1% in Q3 2026, unchanged from Q2 2026 and 80 basis points higher than the 10.3% recorded in Q3 2025, according to Kidder Mathews research. Availability remains elevated relative to vacancy, which reflects space that is on the market but not yet vacated (Data source: CoStar).
What are industrial asking rents in San Diego in Q3 2026?
The average direct asking lease rate for San Diego industrial space was $1.47 per square foot per month NNN in Q3 2026, unchanged from both Q2 2026 and Q3 2025, according to Kidder Mathews research. By submarket, average rates ranged from $0.87 in Sports Arena/Airport to $2.47 in Sorrento Mesa. Landlords are competing for tenants amid elevated availability (Data source: CoStar).
What was industrial net absorption in San Diego in Q3 2026?
San Diego industrial direct net absorption was positive 205,737 SF in Q3 2026, reversing negative 272.1K SF in Q2 2026, according to Kidder Mathews research. Net absorption measures the change in occupied space, so a positive figure means more space was taken by tenants than was vacated. Year-to-date absorption reached 776,480 SF, compared with negative 1,192,418 SF through the same point in 2025 (Data source: CoStar).
How much industrial space was leased in San Diego in Q3 2026?
San Diego industrial lease transactions totaled 2,029,552 SF in Q3 2026, down from the prior quarter and below the 2.3M SF recorded in Q3 2025, according to Kidder Mathews research. Year-to-date leasing activity reached 7,143,376 SF, which is 5.2% below the 7,533,228 SF recorded through the same point in 2025 (Data source: CoStar).
How active was industrial investment sales volume in San Diego in Q3 2026?
San Diego industrial sales totaled 1,779,051 SF across 51 transactions and $430.7M in dollar volume in Q3 2026, according to Kidder Mathews research. Year-to-date sales volume reached 4,667,954 SF, up 41.6% from 3,295,539 SF in the same period of 2025, and average quarterly pricing reached $272.08 per square foot (Data source: CoStar).
What was the largest industrial sale in San Diego in Q3 2026?
The largest San Diego industrial sale in Q3 2026 was Carlsbad Research Center in Carlsbad, a 157,973 SF property that sold for $45,000,000 ($284.86 per SF), according to Kidder Mathews research. Majestic Asset Management, Inc. was the buyer and Lincoln Property Company was the seller. The second-largest sale was 901 Bay Marina Dr in National City, which sold for $31,000,000 to Realty Income Corporation (Data source: CoStar).
What was the largest industrial lease in San Diego in Q3 2026?
The largest San Diego industrial lease in Q3 2026 was AO Reed’s 100,596 SF lease at 2611 Business Park Dr in Vista, signed in August 2026 with landlord Sagard Real Estate, according to Kidder Mathews research. The next largest were renewals in Otay Mesa and Mira Mesa/Miramar, led by Expeditors Int’l of Washington, Inc. at 98,822 SF (Data source: CoStar).
How much industrial space is under construction in San Diego in Q3 2026?
Approximately 423,617 SF of industrial space was under construction in San Diego at the end of Q3 2026, according to Kidder Mathews research. The quarter included 847.2K SF of new deliveries, and 2026 year-to-date construction completions totaled 1,813,358 SF. The largest project underway is 2830 Whiptail Loop in Carlsbad at 165,000 SF, owned by Oxford Properties Group and scheduled for delivery in 4Q 2026 (Data source: CoStar).
Which San Diego industrial submarkets have the lowest and highest vacancy in Q3 2026?
By region, East County had the lowest San Diego industrial direct vacancy rate at 2.6% in Q3 2026, while South County had the highest at 11.8%, according to Kidder Mathews research. Within South County, Otay Mesa recorded a 14.2% direct vacancy rate, and the countywide direct vacancy rate was 6.5% (Data source: CoStar).
What is the outlook for the San Diego industrial market after Q3 2026?
Kidder Mathews research expects gradual stabilization in the San Diego industrial market, as improving occupancy and a construction pipeline that has narrowed to approximately 423.6K SF could support absorption of recently delivered space. Elevated availability should continue to favor tenants. San Diego County’s unemployment rate was 4.9% in August 2026, below California’s 5.1% (Data source: U.S. Bureau of Labor Statistics, EDD).
Last updated: Q3 2026. Data source: CoStar, EDD, U.S. Bureau of Labor Statistics, CoStar News, RENTV. Compiled by the Kidder Mathews Research Group.
Q3 2026 San Diego Industrial Market: Key Data Points
Explore our full San Diego industrial market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Vacancy and availability: Total vacancy declined 20 bps quarter over quarter to 7.2%, unchanged from Q3 2025. Total availability held at 11.1%, up 80 bps year over year.
- Net absorption: Direct net absorption was positive 205,737 SF, reversing negative 272.1K SF in Q2 2026. Year-to-date absorption reached 776,480 SF versus negative 1,192,418 SF through the same point in 2025.
- Leasing activity: Lease transactions totaled 2,029,552 SF, below the 2.3M SF recorded in Q3 2025. Year-to-date leasing of 7,143,376 SF is 5.2% below the same period last year.
- Asking rents: Direct asking rents held at $1.47 PSF NNN, unchanged from both last quarter and one year ago.
- Sales volume: 1,779,051 SF traded across 51 transactions totaling $430.7M. Year-to-date sales volume of 4,667,954 SF is up 41.6% year over year, with average quarterly pricing of $272.08 PSF.
- Construction: The quarter included 847.2K SF of new deliveries, while the pipeline has narrowed to approximately 423.6K SF under construction.
- Notable transactions: Carlsbad Research Center sold for $45.0M, the largest sale of the quarter, and AO Reed leased 100,596 SF in Vista, the largest lease.
Submarket Statistics
| Submarket | Total Inventory (SF) |
Direct Vacancy Rate |
Total Vacancy Rate |
3Q26 Direct Net Absorption (SF) |
YTD Direct Net Absorption (SF) |
SF Under Construction |
3Q26 Total Leasing Activity (SF) |
Average Direct Rental Rate (NNN) |
|---|
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | SF Under Construction | 3Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Carlsbad | 15,796,295 | 7.2% | 8.4% | 101,091 | -307,644 | 165,000 | 151,372 | $1.51 |
| Escondido | 7,798,008 | 4.1% | 4.5% | 2,448 | -35,955 | 0 | 132,653 | $1.35 |
| North Beach Cities | 347,735 | 0.0% | 0.0% | 980 | 980 | 0 | 0 | — |
| Oceanside | 9,602,094 | 3.1% | 3.5% | 9,389 | 14,283 | 15,300 | 24,834 | $1.21 |
| San Marcos | 9,038,695 | 8.8% | 9.3% | 20,030 | -40,666 | 0 | 178,707 | $1.27 |
| Vista | 14,679,318 | 9.5% | 9.8% | 98,873 | -63,798 | 0 | 265,892 | $1.24 |
| North County | 57,262,145 | 6.9% | 7.5% | 232,811 | -432,800 | 180,300 | 753,458 | $1.33 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | SF Under Construction | 3Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Kearny Mesa | 15,293,933 | 4.6% | 4.7% | -71,311 | -29,923 | 0 | 145,065 | $2.03 |
| Mira Mesa/Miramar | 17,402,640 | 7.0% | 7.9% | 85,359 | -20,479 | 0 | 218,614 | $1.79 |
| PB/Rose Canyon/Morena | 2,464,139 | 5.7% | 7.4% | 4,232 | 153,321 | 0 | 26,257 | $1.59 |
| Sorrento Mesa | 7,051,308 | 11.3% | 14.4% | -399,311 | -458,261 | 0 | 7,365 | $2.47 |
| Sorrento Valley | 2,229,376 | 3.3% | 3.7% | 55,951 | 76,890 | 0 | 19,444 | $1.81 |
| Sports Arena/Airport | 2,966,157 | 4.1% | 4.1% | 5,818 | 1,173 | 0 | 29,105 | $0.87 |
| Torrey Pines | 1,587,478 | 5.4% | 5.7% | 387 | -1,113 | 0 | 0 | — |
| UTC | 622,587 | 25.4% | 25.4% | 0 | -74,344 | 0 | 0 | — |
| Central County | 49,617,618 | 6.6% | 7.5% | -318,875 | -352,736 | 0 | 445,850 | $1.90 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | SF Under Construction | 3Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Mission Gorge | 1,939,374 | 4.9% | 4.9% | 11,944 | 29,062 | 0 | 7,848 | $1.89 |
| Poway | 9,767,968 | 1.7% | 2.7% | -905 | 30,624 | 0 | 50,525 | $1.59 |
| Rancho Bernardo | 7,415,055 | 6.6% | 9.4% | 87,560 | -67,596 | 0 | 163,890 | $1.99 |
| Scripps Ranch | 1,428,755 | 8.3% | 8.3% | -10,613 | 23,448 | 0 | 4,061 | $1.71 |
| I-15 Corridor | 20,551,152 | 4.3% | 5.7% | 87,986 | 15,538 | 0 | 226,324 | $1.77 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | SF Under Construction | 3Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Chula Vista | 8,491,527 | 9.8% | 9.9% | 123,543 | 478,899 | 66,384 | 63,665 | $1.25 |
| Downtown | 1,934,682 | 4.0% | 4.0% | -16,851 | -40,228 | 0 | 0 | — |
| National City | 3,728,857 | 4.7% | 4.7% | 19,995 | 16,948 | 0 | 51,805 | $1.66 |
| Otay Mesa | 27,269,998 | 14.2% | 14.9% | -161,379 | 873,721 | 176,933 | 326,048 | $0.99 |
| San Ysidro/Imp Beach | 1,360,876 | 7.4% | 7.4% | -2,684 | -15,733 | 0 | 11,152 | $1.36 |
| South County | 42,785,940 | 11.8% | 12.3% | -37,376 | 1,313,607 | 243,317 | 452,670 | $1.12 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | SF Under Construction | 3Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| East City | 859,079 | 0.0% | 0.0% | 0 | 0 | 0 | 0 | — |
| El Cajon | 10,204,642 | 1.4% | 1.5% | 162,268 | 198,899 | 0 | 32,623 | $1.51 |
| La Mesa/Spring Valley | 2,567,342 | 2.2% | 3.1% | -3,171 | -20,967 | 0 | 18,272 | $1.51 |
| Santee | 4,282,750 | 2.7% | 2.8% | 51,692 | 39,704 | 0 | 53,396 | $1.38 |
| Southeast San Diego | 4,702,169 | 5.9% | 5.9% | 60,492 | 39,563 | 0 | 30,434 | $1.41 |
| East County | 22,615,982 | 2.6% | 2.8% | 271,281 | 257,199 | 0 | 134,725 | $1.46 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | SF Under Construction | 3Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Outlying SD County N | 1,187,848 | 1.9% | 1.9% | 85 | 2,830 | 0 | 1,525 | — |
| Outlying SD County S | 974,205 | 4.0% | 4.0% | -30,175 | -27,158 | 0 | 15,000 | $1.45 |
| Outlying East San Diego City | 2,162,053 | 2.8% | 2.8% | -30,090 | -24,328 | 0 | 16,525 | $1.45 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | SF Under Construction | 3Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|---|
| Total | 194,994,890 | 6.5% | 7.2% | 205,737 | 776,480 | 423,617 | 2,029,552 | $1.47 |
Significant Sale Transactions 3Q26
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| Carlsbad Research Center | Carlsbad | 157,973 | $45,000,000 | $284.86 | Majestic Asset Management, Inc. | Lincoln Property Company |
| 901 Bay Marina Dr | National City | 91,541 | $31,000,000 | $338.65 | Realty Income Corporation | DWS Group |
| Carlsbad Oaks I | Carlsbad | 104,298 | $26,600,000 | $255.04 | SENTRE, Inc. | Bixby Land Company |
| 2025 Gillespie Way | El Cajon | 150,159 | $24,000,000 | $159.83 | Palomar Chula Partners, LLC | Cabot Properties, Inc. |
| 8830 Siempre Viva Rd | Otay Mesa | 153,166 | $22,600,000 | $147.55 | NorthPoint Development | TIAA |
Significant Lease Transactions 3Q26
| Property | Submarket | SF | Transaction Date | Landlord | Tenant | Lease Type |
|---|---|---|---|---|---|---|
| 2611 Business Park Dr | Vista | 100,596 | August 2026 | Sagard Real Estate | AO Reed | New Lease |
| 1470 Exposition Way | Otay Mesa | 98,822 | September 2026 | PPF Sudberry Ocean View Hills, LP | Expeditors Int’l of Washington, Inc. | Renewal |
| 9440 Carroll Park Dr | Mira Mesa/Miramar | 97,126 | August 2026 | Irvine Co. | Acon Laboratories | Renewal |
| 1224 Exposition Way | Otay Mesa | 89,955 | August 2026 | Morgan Stanley & Co., LLC | 3PL Winner | Renewal |
| 1319 Rocky Point Dr | Oceanside | 64,109 | July 2026 | NKL Paolone | Weiland Sliding Doors & Windows, Inc. | Renewal |
Significant Under Construction
| Property | Address | Submarket | SF | Owner | Delivery |
|---|---|---|---|---|---|
| 2830 Whiptail Loop | 2830/2836 Whiptail Loop | Carlsbad | 165,000 | Oxford Properties Group | 4Q 2026 |
| RD Business Center | 7373-7363 Britannia Ct | Otay Mesa | 133,933 | RD Business Center, LP | 4Q 2026 |
| Otay River Business Park | Faivre St – Lots 1 & 2 | Chula Vista | 66,384 | Sudberry Development | 1Q 2027 |
| Otay Center Dr | Otay Center Dr | Otay Mesa | 43,000 | Cedar Realty Group | 4Q 2026 |
| 525-555 Airport Rd | 525-555 Airport Rd | Oceanside | 15,300 | Undisclosed | 1Q 2027 |
Data as of Q3 2026. Source: CoStar, EDD, U.S. Bureau of Labor Statistics, CoStar News, RENTV. Prepared by the Kidder Mathews Research Group.
ContactGARY BARAGONA |
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