The following reflects San Diego industrial market conditions as of Q2 2026.
MARKET DRIVERS
San Diego’s industrial market posted negative direct net absorption of 339.0K SF in 2Q26, a reversal from the positive 517.3K SF recorded in 1Q26 but an improvement over the negative 517.3K SF recorded in 2Q25. Even with the quarterly pullback, cumulative absorption for 2026 remained positive at 178.3K SF, compared with negative 928.5K SF through the same point in 2025.
Total vacancy rose roughly 10 basis points quarter-over-quarter to 9.4% in 2Q26, now 40 basis points above year-ago levels. Total availability also increased, up 20 basis points for the quarter and 130 basis points year-over-year to 13.3%. No new deliveries came online during the quarter, so the uptick reflects slower move-ins and continued lease-up of space delivered earlier in the year.
Lease transaction volume reached 2.6M SF across 322 deals in 2Q26, down 5.7% quarter-over-quarter and 13.0% year-over-year, though year-to-date leasing activity trails 2025’s pace by just 3.8%. Asking rents ticked up slightly to $1.47 PSF NNN but remain 0.7% below year-ago levels as landlords compete for tenants in larger, second-generation blocks of space.
Investment sales activity stayed muted in 2Q26, with 1.3M SF trading across 47 transactions for $253.4M in total volume. Average pricing fell to $232.60 PSF, down from $303.58 PSF the prior quarter and $287.80 PSF a year ago, suggesting buyers remain active but are underwriting more conservatively amid selective capital markets.
ECONOMIC OVERVIEW
Manufacturing employment in the San Diego-Chula Vista-Carlsbad MSA measured 109.4K jobs in May 2026, while trade, transportation, and utilities employment totaled 215.7K jobs — both down 0.6% over the same period, pointing to modest cooling across several industrial-linked sectors.
San Diego County’s unemployment rate stood at 3.9% in May 2026, down from 4.1% in April and below California’s 5.3% statewide rate. While industrial-linked job growth has been mixed, the county’s diversified economic base across 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 softer occupancy fundamentals but relatively steady leasing demand. Negative absorption and rising availability suggest the market is still digesting earlier deliveries, though leasing volume remains healthy enough to indicate tenant demand hasn’t disappeared. Instead, occupiers are being selective, prioritizing functional buildings with efficient loading, clear heights, yard capacity, and access to major transportation corridors.
Recent activity reinforces this selective-demand story. The quarter’s largest leases included Amazon in El Cajon, Waymo in Chula Vista, and Rock West Composites in Otay Mesa, reflecting continued demand from logistics, technology, and advanced manufacturing users — especially in submarkets with newer product and strong regional or cross-border distribution access. Otay Business Park remains the largest near-term supply story, with 612.2K SF expected to deliver in 3Q26. Tenant-favorable conditions should persist while vacancy stays elevated, but the absence of new deliveries and a smaller construction pipeline should help stabilize the market as recently completed space is absorbed.
Frequently Asked Questions
What is the industrial vacancy rate in San Diego in Q2 2026?
San Diego’s total industrial vacancy rate was 9.4% in Q2 2026, up 40 basis points year-over-year from 9.0% in Q2 2025, according to Kidder Mathews research. Total availability, which includes space marketed for sublease or future occupancy, was higher at 13.3%. The increase reflects continued lease-up of space delivered earlier in the year rather than new supply, since no new buildings were completed in the quarter.
How much industrial space is available for lease in San Diego right now?
Total availability across San Diego’s industrial market stood at 13.3% in Q2 2026, up 20 basis points quarter-over-quarter and 130 basis points year-over-year, according to Kidder Mathews research. This is higher than the 9.4% direct vacancy rate because it also counts space being marketed ahead of an upcoming vacancy or for sublease. San Diego County’s total industrial inventory is roughly 213.3 million SF.
What are average industrial asking rents in San Diego?
San Diego’s average industrial asking rent was $1.47 PSF NNN per month in Q2 2026, essentially flat from $1.45 in Q1 2026 and down 0.7% from $1.48 a year ago, according to Kidder Mathews research. Rates vary widely by submarket, ranging from roughly $0.87 PSF in Sports Arena/Airport to $2.03 PSF in Kearny Mesa. Landlords continue to compete for tenants by offering concessions on larger, second-generation blocks of space.
How much industrial leasing activity took place in San Diego in Q2 2026?
San Diego industrial tenants signed 2.6 million SF of leases across 322 transactions in Q2 2026, according to Kidder Mathews research. That’s down 5.7% from the prior quarter and 13.0% from a year ago, though year-to-date leasing volume of roughly 5.3 million SF is only 3.8% below the pace recorded through the same point in 2025. Notable Q2 leases included Amazon in El Cajon and Waymo in Chula Vista.
What was net absorption for San Diego industrial in Q2 2026?
San Diego’s industrial market recorded negative direct net absorption of 339,000 SF in Q2 2026, meaning occupied space declined more than it grew during the quarter, according to Kidder Mathews research. That reversed the positive 517,300 SF absorbed in Q1 2026. Even so, cumulative absorption for 2026 remained positive at 178,300 SF, a notable improvement over the negative 928,500 SF recorded through the same point in 2025.
What’s being built in San Diego’s industrial market?
San Diego had roughly 977,600 SF of industrial space under construction as of Q2 2026, concentrated mainly in the South County submarket, according to Kidder Mathews research. The largest project is Otay Business Park in Otay Mesa, a 612,240 SF building from Amistad Holdings, LLC slated to deliver in Q3 2026. No new space was delivered during the second quarter itself.
What was the largest industrial sale in San Diego in Q2 2026?
The largest industrial sale in San Diego in Q2 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 PSF), according to Kidder Mathews research. Schnitzer Properties Mgmt., LLC purchased the asset from Westport Capital Ptns., LLC. Overall, San Diego industrial sales totaled $253.4 million across 1.3 million SF and 47 transactions during the quarter.
What was the largest industrial lease signed in San Diego in Q2 2026?
The largest industrial lease signed in San Diego in Q2 2026 was Amazon’s 222,293 SF lease at Gillespie Field iPark in El Cajon, completed in June 2026 with landlord Chesnut Properties, according to Kidder Mathews research. The second-largest was Waymo’s 105,550 SF lease at Heritage Industrial Center in Chula Vista. Both deals reflect continued demand from logistics and technology users for larger blocks of space.
How are San Diego industrial sale prices trending?
Average industrial sale pricing in San Diego fell to $232.60 PSF in Q2 2026, down from $303.58 PSF in Q1 2026 and $287.80 PSF a year earlier, according to Kidder Mathews research. Sales volume totaled $253.4 million across 47 transactions and 1.3 million SF. The decline suggests buyers remain active but are underwriting more conservatively as capital markets stay selective.
What is the outlook for the San Diego industrial market?
Kidder Mathews expects tenant-favorable conditions to persist in San Diego’s industrial market while vacancy remains elevated, but a smaller construction pipeline and the absence of new deliveries should help stabilize conditions as recently completed space is absorbed. Occupiers continue to prioritize functional buildings with efficient loading, clear heights, yard capacity, and strong access to transportation corridors. Demand remains strongest from logistics, technology, and advanced manufacturing users, particularly in submarkets near cross-border distribution routes.
Last updated: Q2 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 Rate Continues to Rise: San Diego’s industrial vacancy rate increased to 9.4% in 2Q 2026, up 40 basis points year-over-year as the market continues to absorb recently delivered space.
- Availability Reaches 13.3%: Total availability climbed to 13.3%, increasing 130 basis points from one year ago and providing tenants with more leasing options across the market.
- Leasing Activity Remains Active: Industrial leasing volume totaled 2.6M SF across 322 transactions during the quarter, demonstrating continued tenant demand despite a slower market environment.
- Asking Rents Hold Relatively Steady: Average asking rents measured $1.47 PSF NNN, up slightly from the prior quarter but down just 0.7% year-over-year.
- Year-to-Date Absorption Improves: While 2Q 2026 recorded negative 339K SF of direct net absorption, cumulative absorption remained positive at 178K SF through midyear, a substantial improvement from negative 928K SF during the same period in 2025.
- Investment Sales Remain Selective: Industrial sales volume totaled $253.4M across 1.3M SF traded, while average pricing declined to $232.60 PSF as investors maintained a disciplined underwriting approach.
Submarket Statistics
| Submarket | Total Inventory (SF) |
Direct Vacancy Rate |
Total Vacancy Rate |
2Q26 Direct Net Absorption (SF) |
YTD Direct Net Absorption (SF) |
2Q26 Total Leasing Activity (SF) |
SF Under Construction |
Average Direct Rental Rate (NNN) |
|---|
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | SF Under Construction | Average Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| Carlsbad | 16,295,929 | 10.0% | 11.4% | -166,710 | -420,904 | 140,713 | 165,000 | $1.52 |
| Escondido | 7,775,307 | 4.2% | 4.5% | -15,524 | -38,403 | 74,226 | 0 | $1.32 |
| North Beach Cities | 347,735 | 0.3% | 0.3% | -980 | 0 | 0 | 0 | — |
| Oceanside | 10,169,280 | 3.0% | 3.5% | -13,438 | 4,894 | 168,271 | 0 | $1.21 |
| San Marcos | 9,038,516 | 9.0% | 9.6% | -26,891 | -60,696 | 97,358 | 0 | $1.35 |
| Vista | 14,691,754 | 9.4% | 9.7% | -89,622 | -162,671 | 191,527 | 0 | $1.25 |
| North County | 58,318,521 | 7.7% | 8.3% | -313,165 | -677,780 | 672,095 | 165,000 | $1.34 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | SF Under Construction | Average Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| Kearny Mesa | 15,316,929 | 4.1% | 4.4% | 92,995 | 41,388 | 164,030 | 0 | $2.03 |
| Mira Mesa/Miramar | 18,201,421 | 8.5% | 9.8% | 60,203 | -198,968 | 219,824 | 0 | $1.80 |
| PB/Rose Canyon/Morena | 2,565,347 | 7.0% | 8.4% | 90,871 | 75,333 | 98,379 | 0 | $1.59 |
| Sorrento Mesa | 13,385,026 | 23.0% | 27.0% | -3,018 | 5,403 | 227,378 | 0 | $1.99 |
| Sorrento Valley | 3,664,541 | 16.3% | 19.6% | 14,742 | 40,336 | 35,905 | 0 | $1.81 |
| Sports Arena/Airport | 2,963,957 | 4.3% | 4.3% | 1,000 | -4,645 | 6,000 | 0 | $0.87 |
| Torrey Pines | 5,303,238 | 10.8% | 13.1% | -5,895 | -91,997 | 9,906 | 0 | — |
| UTC | 3,790,487 | 23.6% | 23.6% | -3,373 | -73,645 | 7,500 | 0 | — |
| Central County | 65,190,946 | 11.7% | 13.4% | 247,525 | -206,795 | 768,922 | 0 | $1.85 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | SF Under Construction | Average Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| Chula Vista | 10,282,067 | 9.3% | 9.4% | 40,570 | 249,806 | 209,596 | 66,384 | $1.25 |
| Downtown | 1,923,978 | 3.1% | 3.1% | -25,524 | -23,377 | 0 | 0 | — |
| National City | 3,730,021 | 5.2% | 5.2% | -3,621 | -3,047 | 27,498 | 0 | $1.72 |
| Otay Mesa | 26,631,008 | 10.7% | 11.6% | -114,520 | 933,342 | 382,973 | 746,173 | $1.04 |
| San Ysidro/Imp Beach | 1,355,263 | 7.3% | 7.3% | -5,026 | -13,049 | 0 | 0 | $1.35 |
| South County | 43,922,337 | 9.5% | 10.0% | -108,121 | 1,143,675 | 620,067 | 812,557 | $1.16 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | SF Under Construction | Average Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| East City | 864,329 | 0.0% | 0.0% | 0 | 0 | 0 | 0 | — |
| El Cajon | 10,204,642 | 2.9% | 2.9% | -7,640 | 36,631 | 250,881 | 0 | $1.49 |
| La Mesa/Spring Valley | 2,712,586 | 2.0% | 2.8% | 2,550 | -17,796 | 16,329 | 0 | $1.57 |
| Santee | 4,212,750 | 2.3% | 3.0% | -22,161 | -11,988 | 26,718 | 0 | $1.36 |
| Southeast San Diego | 4,721,539 | 7.2% | 7.2% | -893 | -20,929 | 8,504 | 0 | $1.32 |
| East County | 22,715,846 | 3.5% | 3.7% | -28,144 | -14,082 | 302,432 | 0 | $1.44 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | SF Under Construction | Average Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| Outlying SD County N | 1,201,636 | 1.9% | 1.9% | 5,345 | 2,745 | 14,805 | 0 | — |
| Outlying SD County S | 974,205 | 0.9% | 0.9% | -383 | 3,017 | 8,617 | 0 | $1.45 |
| Outlying East San Diego City | 2,175,841 | 1.4% | 1.4% | 4,962 | 5,762 | 23,422 | 0 | $1.45 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Total Leasing Activity (SF) | SF Under Construction | Average Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| San Diego County Total | 213,339,781 | 8.5% | 9.4% | -338,964 | 178,332 | 2,559,582 | 977,557 | $1.47 |
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 | Jun 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 Q2 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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