MARKET DRIVERS
The San Diego office market vacancy rate increased by 180 basis points (bps) year-over-year (YOY) and rose 20 bps quarter-over-quarter (QOQ) to 14.2%. Total availability rose 70-bps over the quarter, and 60 bps over the year, reaching 17.2%.
Leasing activity totaled 1.5M SF in 3Q25, marking a 7.6% increase from the 1.4M SF recorded in 3Q24. Direct net absorption was negative 175.1K SF, bringing the cumulative absorption for 2025 to negative 364.2K SF. If the market doesn’t have a strong performance next quarter, it will be the third consecutive year of negative net absorption.
Office sales reached 995.6K SF of transactions in 3Q25, which brought the cumulative total to 3.1M SF in 2025. This figure is 25.6% higher than last year and additionally have gone for a higher average price/SF compared to last year as well; $274.24 this year compared to $189.39 last year.
ECONOMIC REVIEW
In August 2025, San Diego County’s unemployment rate was recorded at 5.0%, up 100 bps
since May and up 10 bps YOY. Similarly, California recorded a 5.5% rate, 20 bps higher QOQ and 10 bps higher YOY.
The San Diego-Carlsbad-San Marcos Metropolitan Statistical Area (MSA) lost 14.4K jobs in total non-farm employment between February and May. The largest decrease came from
the Government sector, which lost 16.2K jobs. The Professional and Business Services sector also lost 4.2K jobs in this time frame. Conversely, Education and Health Services, as well as Leisure and Hospitality saw modest gains.
NEAR-TERM OUTLOOK
Downtown San Diego’s office sector remains under strain as Irvine Co. continues its sell-off, recently transferring the 21-story tower at 501 W. Broadway to Santa Monica–based XYZ Rent for $69M. The buyer plans upgrades to modernize the building and boost occupancy in a downtown area where vacancies hover near record highs of 35.6%. Meanwhile, investment activity is shifting toward stronger submarkets. Lincoln Property Co. demonstrated confidence with its $92M purchase of the AMP&RSAND campus in Mission Valley, where vacancies are notably lower at 15.9%, highlighting tenant demand for high-quality, amenitized workspaces in accessible locations.
3Q 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 Rises: San Diego’s office vacancy rate increased to 14.2%, up 180 bps year-over-year.
- Negative Net Absorption: Net absorption totaled -175K SF for the quarter, bringing YTD absorption to -364K SF.
- Leasing Activity Grows: Leasing volume reached 1.5M SF in Q3, a 7.6% increase from Q3 2024.
- Sales Volume Up: Office sales totaled 995.6K SF in Q3, contributing to a YTD total of 3.1M SF—up 25.6% year-over-year.
- Average Asking Rent Holds: Asking lease rates averaged $3.08 PSF FSG, a slight 0.9% increase year-over-year.
- Downtown Vacancy Near Record Highs: Downtown San Diego vacancy reached 35.6%, while Mission Valley saw stronger performance at 15.9%.
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