MARKET DRIVERS
The San Diego office market vacancy rate increased by 160 basis point (bps) year-over-year (YOY) and rose 10 bps quarter-over-quarter (QOQ) to 14.1%. Total availability rose 40 bps over the quarter, and 40 bps over the year, reaching 17.1%.
Leasing activity totaled 931.1K SF in 4Q25, a 41.4% decrease from the 1.6M SF recorded in 4Q24. Direct net absorption was negative 141.6K SF, bringing the cumulative absorption for 2025 to negative 484.5K SF. With 2025 ending in negative territory, it marks the third consecutive year of negative net absorption.
Office sales reached 2.4M SF of transactions in 4Q25, which brought the cumulative total to 6.5M SF in 2025. This figure is 51.4% higher than last year and has also traded at a higher average price/SF; approximately $210.58 this year compared to $190.22 last year.
ECONOMIC REVIEW
In September 2025, San Diego County’s unemployment rate was recorded at 4.9%, up 90 bps since May and up 50 bps YOY. Similarly, California recorded a 5.6% rate, 60 bps higher since May and 40 bps higher YOY.
Between August and November 2025, total nonfarm employment in the San Diego metro area was essentially flat, edging down from 1,559.1K to 1,558.9K jobs. Over the same period, Professional and Business Services (-2.8K) and Leisure and Hospitality (-3.8K) declined, while Government (+8.6K) and Education and Health Services (+1.3K) posted gains.
NEAR-TERM OUTLOOK
Downtown San Diego’s office sector remains under pressure as Irvine Co. continues its retreat from the CBD, selling remaining properties at steep discounts amid elevated vacancy and ongoing concerns tied to the downtown environment. At the same time, investment appetite is concentrating in stronger, amenity-rich submarkets where buyers see a clearer path to stabilization. A recent example is the acquisition of the Ampersand creative office campus in Mission Valley by a joint venture between Strategic Value Partners and Lincoln Property Company, highlighting continued interest in well-located assets that can be repositioned to meet tenant demand for higher-quality, flexible work environments.
4Q 2025 San Diego Office Market: Key Data Points
Explore our full San Diego office market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Vacancy Rate Increased: Overall vacancy reached 14.1%, up 160 basis points year-over-year.
- Availability Rate Edged Higher: Total availability rose to 17.1%, a 40 bps increase from 4Q 2024.
- Asking Lease Rate Stable: Average asking rent was $3.05/SF/month, up 0.7% year-over-year.
- Leasing Activity Declined: Quarterly leasing volume totaled 931K SF, down 41.4% from 4Q 2024.
- Sales Volume Surged: Office sales reached 2.42M SF in 4Q, contributing to 6.49M SF for 2025, a 51.4% increase year-over-year.
- Negative Net Absorption: Q4 absorption was -141.6K SF, bringing 2025 to -484.5K SF, marking the third consecutive year of negative absorption.
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