The following reflects San Diego industrial market conditions as of 2Q 2026.
MARKET DRIVERS
San Diego’s industrial market posted negative direct net absorption of 111.0K SF in the second quarter, though cumulative year-to-date absorption remained positive at 570.7K SF, a marked improvement from the negative 657.2K SF recorded through the same point in 2025. The turnaround points to steadier tenant demand and continued market stabilization.
Total vacancy climbed 20 basis points quarter over quarter to 7.4%, now 40 bps above year-ago levels. Total availability held flat at 11.0% for the quarter but remains 130 bps higher year over year. No new space delivered during the quarter, so the vacancy increase reflects softer occupancy and the ongoing lease-up of space that came online earlier in the year.
Leasing activity totaled 2.4M SF across 307 transactions, down 3.2% from the prior quarter and 10.6% year over year; year-to-date volume trails 2025’s pace by 4.2%. Asking rents rose to $1.47/SF NNN, up 1.4% quarter over quarter but still 0.7% below year-ago levels, as landlords compete for tenants in larger, second-generation blocks of space.
Investment sales activity stayed muted, with 1.3M SF trading across 47 transactions for $253.4M in dollar volume. Average pricing fell to $232.60/SF, down from $303.58/SF last quarter and $287.80/SF a year ago, indicating buyers remain active but are underwriting more conservatively as capital markets stay selective.
ECONOMIC OVERVIEW
Manufacturing employment in the San Diego-Chula Vista-Carlsbad MSA totaled 109.4K jobs in May 2026, while trade, transportation, and utilities employment reached 215.7K jobs. Both sectors were down 0.6% over the same period, pointing to modest cooling across several industrial-linked segments.
San Diego County’s unemployment rate stood at 3.9% in May 2026, down from 4.1% in April and below California’s statewide rate of 5.3%. While industrial-linked job growth has been mixed, the county’s diversified economic base, spanning defense, life sciences, tourism, and cross-border trade, continues to support long-term demand for industrial and logistics space.
NEAR-TERM OUTLOOK
San Diego’s industrial market entered midyear with steady leasing demand and 570K SF of positive year-to-date net absorption. While the second quarter posted negative absorption and a modest increase in vacancy as the market continued to absorb recently delivered space, quarterly leasing volume remained near 2.6M SF and year-to-date activity is only slightly below last year’s pace. Tenant demand remains selective, with occupiers prioritizing functional buildings offering efficient loading, higher clear heights, yard capacity, and access to major transportation corridors.
Recent activity reinforces that trend. The quarter’s largest leases included Amazon at Gillespie Field iPark in El Cajon, Waymo at Heritage Industrial Center in Chula Vista, and Rock West Composites in Otay Mesa, highlighting continued demand from logistics, technology, and advanced manufacturing users. Otay Business Park remains the largest near-term supply story, with 612.2K SF expected to deliver in 3Q26. Looking ahead, tenant-favorable conditions should persist, but with no deliveries this quarter and the construction pipeline narrowing to approximately 1.4M SF, the market is well positioned to continue stabilizing as recently completed space is absorbed.
Frequently Asked Questions
What is the industrial vacancy rate in San Diego in 2Q 2026?
San Diego’s total industrial vacancy rate was 7.4% in 2Q 2026, up 20 basis points from 7.2% in 1Q 2026 and 40 basis points higher than the 7.0% recorded in 2Q 2025, according to Kidder Mathews research. Total availability held at 11.0% for the quarter, 130 bps above year-ago levels.
How much industrial space was leased in San Diego in 2Q 2026?
San Diego industrial tenants leased 2.4M SF (2,377,526 SF) across 307 transactions in 2Q 2026, according to Kidder Mathews research. That volume was down 3.2% quarter over quarter and 10.6% year over year, and year-to-date leasing of 4.8M SF trails the same point in 2025 by 4.2%.
What was net absorption for San Diego industrial in 2Q 2026?
San Diego’s industrial market recorded negative direct net absorption of 111.0K SF (-110,988 SF) in 2Q 2026, meaning tenants vacated more space than they occupied during the quarter, according to Kidder Mathews research. Despite the quarterly decline, cumulative year-to-date absorption remained positive at 570,743 SF, an improvement from -657,207 SF through the same period in 2025.
What are average industrial asking rents in San Diego?
Average direct asking industrial rents in San Diego were $1.47/SF NNN in 2Q 2026, up 1.4% from $1.45 in 1Q 2026 but down 0.7% from $1.48 a year earlier, according to Kidder Mathews research. Rents varied widely by submarket, ranging from $0.87/SF in Sports Arena/Airport to $2.03/SF in Kearny Mesa.
How much industrial space is under construction in San Diego?
San Diego had 977,557 SF of industrial space under construction as of 2Q 2026, according to Kidder Mathews research. Otay Mesa accounts for the largest share at 746,173 SF, led by the 612,240 SF Otay Business Park expected to deliver in 3Q26. No new space delivered during 2Q 2026.
What was the largest industrial sale in San Diego in 2Q 2026?
The largest industrial sale in San Diego in 2Q 2026 was Camino Santa Fe Business Park in the Mira Mesa/Miramar submarket, a 172,504 SF property that sold for $58,000,000 ($336.22/SF), according to Kidder Mathews research. Schnitzer Properties Management purchased the asset from Westport Capital Partners. Overall, San Diego industrial investment sales totaled $253.4M across 1.3M SF and 47 transactions for the quarter, with average pricing of $232.60/SF.
What was the largest industrial lease in San Diego in 2Q 2026?
The largest industrial lease in San Diego in 2Q 2026 was Amazon’s 222,293 SF lease at Gillespie Field iPark in El Cajon with landlord Chesnut Properties, signed in June 2026, according to Kidder Mathews research. Other notable leases included Waymo’s 105,550 SF lease at Heritage Industrial Center in Chula Vista and Rock West Composites’ 101,758 SF lease in Otay Mesa.
What is the outlook for the San Diego industrial market?
The San Diego industrial market is expected to continue stabilizing through the second half of 2026 as recently delivered space is absorbed, according to Kidder Mathews research. With no new deliveries in 2Q 2026 and the construction pipeline narrowing to approximately 1.4M SF, tenant-favorable conditions should persist, though demand remains selective and focused on functional buildings with efficient loading and strong transportation access.
Last updated: 2Q 2026. Data source: CoStar, EDD, U.S. Bureau of Labor Statistics, FRED, SD Business Journal, CoStar News, Times of San Diego, CommercialSearch. Compiled by the Kidder Mathews Research Group.
2Q 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 rose modestly: Total vacancy increased 20 bps quarter over quarter to 7.4%, 40 bps higher than 2Q 2025, while total availability held at 11.0%.
- YTD absorption stayed positive: Despite -111.0K SF of negative absorption in the quarter, year-to-date net absorption remained positive at 570,743 SF, a sharp improvement from -657,207 SF at this point in 2025.
- Leasing activity slowed: Quarterly leasing totaled 2.4M SF across 307 deals, down 3.2% quarter over quarter and 10.6% year over year.
- Asking rents edged higher: Average asking rents rose to $1.47/SF NNN, up 1.4% quarter over quarter but 0.7% below year-ago levels.
- Construction pipeline narrowed: No new space delivered in 2Q 2026, and the active construction pipeline narrowed to roughly 1.4M SF, led by the 612,240 SF Otay Business Park.
- Investment sales stayed selective: Sales volume totaled $253.4M across 1.3M SF and 47 transactions, with average pricing falling to $232.60/SF from $303.58/SF last quarter.
Submarket Statistics
| Submarket | Total Inventory (SF) |
Direct Vacancy Rate |
Total Vacancy Rate |
2Q26 Direct Net Absorption (SF) |
SF Under Construction |
2Q26 Total Leasing Activity (SF) |
Average Direct Rental Rate (NNN) |
|---|
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | SF Under Construction | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|
| Carlsbad | 15,549,927 | 8.7% | 10.0% | -154,541 | 165,000 | 140,713 | $1.52 |
| Escondido | 7,775,307 | 4.2% | 4.5% | -15,524 | 0 | 74,226 | $1.32 |
| North Beach Cities | 347,735 | 0.3% | 0.3% | -980 | 0 | 0 | — |
| Oceanside | 10,099,024 | 3.1% | 3.5% | -13,438 | 0 | 168,271 | $1.21 |
| San Marcos | 9,038,516 | 9.0% | 9.6% | -26,891 | 0 | 97,358 | $1.35 |
| Vista | 14,691,754 | 9.4% | 9.7% | -89,622 | 0 | 191,527 | $1.25 |
| North County | 57,502,263 | 7.3% | 7.9% | -300,996 | 165,000 | 672,095 | $1.34 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | SF Under Construction | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|
| Kearny Mesa | 15,316,929 | 4.1% | 4.4% | 92,995 | 0 | 164,030 | $2.03 |
| Mira Mesa/Miramar | 17,457,900 | 7.5% | 8.7% | 41,830 | 0 | 212,293 | $1.80 |
| PB/Rose Canyon/Morena | 2,458,235 | 5.9% | 7.4% | 164,627 | 0 | 98,379 | $1.59 |
| Sorrento Mesa | 7,912,996 | 6.2% | 9.7% | -46,298 | 0 | 81,049 | $1.99 |
| Sorrento Valley | 2,341,421 | 5.5% | 6.2% | 12,714 | 0 | 25,115 | $1.81 |
| Sports Arena/Airport | 2,963,957 | 4.3% | 4.3% | 1,000 | 0 | 6,000 | $0.87 |
| Torrey Pines | 1,738,294 | 0.1% | 0.1% | -1,500 | 0 | 0 | — |
| UTC | 1,006,176 | 15.7% | 15.7% | -9,344 | 0 | 0 | — |
| Central County | 51,195,908 | 5.9% | 7.0% | 256,024 | 0 | 586,866 | $1.84 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | SF Under Construction | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|
| Mission Gorge | 1,939,374 | 5.5% | 5.5% | 27,014 | 0 | 2,425 | $1.82 |
| Poway | 9,848,878 | 1.7% | 3.0% | -3,321 | 0 | 30,627 | $1.60 |
| Rancho Bernardo | 7,443,360 | 7.0% | 9.6% | -139,441 | 0 | 64,017 | $1.92 |
| Scripps Ranch | 1,427,221 | 7.6% | 8.0% | -26,273 | 0 | 75,575 | $1.77 |
| I-15 Corridor | 20,658,833 | 4.4% | 5.9% | -142,021 | 0 | 172,644 | $1.75 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | SF Under Construction | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|
| Chula Vista | 10,282,067 | 9.3% | 9.4% | 146,120 | 66,384 | 209,596 | $1.25 |
| Downtown | 1,923,978 | 3.1% | 3.1% | -25,524 | 0 | 0 | — |
| National City | 3,730,021 | 5.2% | 5.2% | -3,621 | 0 | 27,498 | $1.72 |
| Otay Mesa | 26,631,008 | 10.7% | 11.6% | -12,762 | 746,173 | 382,973 | $1.04 |
| San Ysidro/Imperial Beach | 1,355,263 | 7.3% | 7.3% | -5,026 | 0 | 0 | $1.35 |
| South County | 43,922,337 | 9.5% | 10.0% | 99,187 | 812,557 | 620,067 | $1.16 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | SF Under Construction | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|
| East City | 864,329 | 0.0% | 0.0% | 0 | 0 | 0 | — |
| El Cajon | 10,204,642 | 2.9% | 2.9% | -7,640 | 0 | 250,881 | $1.49 |
| La Mesa/Spring Valley | 2,712,586 | 2.0% | 2.8% | 2,550 | 0 | 16,329 | $1.57 |
| Santee | 4,212,750 | 2.3% | 3.0% | -22,161 | 0 | 26,718 | $1.36 |
| Southeast San Diego | 4,721,539 | 7.2% | 7.2% | -893 | 0 | 8,504 | $1.32 |
| East County | 22,715,846 | 3.5% | 3.7% | -28,144 | 0 | 302,432 | $1.44 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | SF Under Construction | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|
| Outlying SD County N | 1,201,636 | 1.9% | 1.9% | 5,345 | 0 | 14,805 | — |
| Outlying SD County S | 974,205 | 0.9% | 0.9% | -383 | 0 | 8,617 | $1.45 |
| Outlying East San Diego City | 2,175,841 | 1.4% | 1.4% | 4,962 | 0 | 23,422 | $1.45 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | SF Under Construction | 2Q26 Total Leasing Activity (SF) | Average Direct Rental Rate NNN |
|---|---|---|---|---|---|---|---|
| San Diego County Total | 198,171,028 | 6.6% | 7.4% | -110,988 | 977,557 | 2,377,526 | $1.47 |
Data as of 2Q 2026. Source: CoStar, EDD, U.S. Bureau of Labor Statistics, FRED, SD Business Journal, CoStar News, Times of San Diego, CommercialSearch. Prepared by the Kidder Mathews Research Group.
Significant Sale Transactions 2Q26
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| Camino Santa Fe Business Park | Mira Mesa/Miramar | 172,504 | $58,000,000 | $336.22 | Schnitzer Properties Mgmt., LLC | Westport Capital Ptns., LLC |
| 2365 Oak Ridge Way | Vista | 70,253 | $21,700,000 | $308.88 | Swarco | JBM Properties, LLC |
| 9125 Rehco Rd | Mira Mesa/Miramar | 60,786 | $17,780,000 | $292.50 | Pacific Rim Mechanical | LBA Logistics |
| 6212 Corte Del Abeto | Carlsbad | 70,224 | $16,000,000 | $227.84 | Staley Point Capital | Elion Partners |
| 1755 La Costa Meadows Dr | San Marcos | 66,976 | $14,500,000 | $216.50 | 1755 La Costa, LLC | SMD Victory, LLC |
Significant Lease Transactions 2Q26
| Property | Submarket | SF | Transaction Date | Landlord | Tenant |
|---|---|---|---|---|---|
| Gillespie Field iPark | El Cajon | 222,293 | June 2026 | Chesnut Properties | Amazon |
| Heritage Industrial Center | Chula Vista | 105,550 | April 2026 | EQT Exeter | Waymo |
| 2055 Dublin Drive | Otay Mesa | 101,758 | May 2026 | STAG Industrial, Inc. | Rock West Composites |
| 7603 St Andrews Ave | Otay Mesa | 63,225 | June 2026 | Beard Land Improvement Company | NuShoe, Inc. |
| 1490 Air Wing Rd | Otay Mesa | 56,684 | April 2026 | 1490 Air Wing Road, LLC | Sanchotena Express |
Significant Under Construction
| Property | Address | Submarket | SF | Owner | Delivery |
|---|---|---|---|---|---|
| Otay Business Park | 1-3 Via De La Amistad Rd | Otay Mesa | 612,240 | Amistad Holdings, LLC | 3Q26 |
| 2830 Whiptail Loop | 2830 Whiptail Loop | Carlsbad | 165,000 | Oxford Properties Group | 3Q26 |
| RD Business Center | 7373-7363 Britannia Ct | Otay Mesa | 133,933 | RD Business Center, LP | 4Q26 |
| Otay River Business Park | Faivre St – Lots 1 & 2 | Chula Vista | 66,384 | Sudberry Development | 4Q26 |
Data as of 2Q 2026. Source: CoStar, EDD, U.S. Bureau of Labor Statistics, FRED, SD Business Journal, CoStar News, Times of San Diego, CommercialSearch. Prepared by the Kidder Mathews Research Group.
ContactGARY BARAGONA |
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