The following reflects San Diego retail market conditions as of Q2 2026.
The San Diego retail market remained fundamentally stable in 2Q 2026, with vacancy holding at 4.5% despite softer tenant demand and negative net absorption. Average asking rents continued to edge higher year-over-year, while new construction activity and deliveries declined significantly, limiting future supply growth. Investment activity strengthened as average sale prices increased and cap rates expanded compared to a year ago. Explore our full San Diego retail market report for detailed analysis of leasing, development, and investment trends.
Frequently Asked Questions
What is the retail vacancy rate in San Diego in Q2 2026?
San Diego’s retail vacancy rate was 4.5% in Q2 2026, unchanged from 4.5% the prior quarter but up 20 basis points from 4.3% a year earlier, according to Kidder Mathews research. (Data source: CoStar)
What are average retail asking rents in San Diego in Q2 2026?
Average retail asking rents in San Diego reached $2.38 per square foot per month in Q2 2026, up 0.96% year-over-year from $2.36 in Q2 2025, though down slightly from $2.42 in the prior quarter, according to Kidder Mathews research.
How much retail space is under construction in San Diego in Q2 2026?
San Diego had 290,191 square feet of retail space under construction as of Q2 2026, a 16.24% decline from 346,465 square feet a year earlier, signaling a shrinking development pipeline, according to Kidder Mathews research.
What is net absorption for San Diego retail in Q2 2026?
San Diego retail posted negative net absorption of -22,131 square feet in Q2 2026, meaning tenants vacated more space than they occupied during the quarter. Year-to-date net absorption totaled -208,667 square feet, compared with -559,493 square feet over the same period in 2025. (Data source: CoStar)
What is the average retail sale price per square foot in San Diego in Q2 2026?
The average retail sale price in San Diego was $446 per square foot in Q2 2026, up 12.81% year-over-year from $395 per square foot in Q2 2025 and up from $320 per square foot in the prior quarter, according to Kidder Mathews research.
What are retail cap rates in San Diego in Q2 2026?
The average retail cap rate in San Diego was 5.4% in Q2 2026, up 70 basis points from 4.7% a year earlier, though down from 6.1% in the prior quarter, according to Kidder Mathews research.
How much retail space was delivered in San Diego in Q2 2026?
San Diego saw 26,597 square feet of new retail construction deliveries in Q2 2026. Year-to-date deliveries totaled 33,208 square feet, a 59.49% decrease from 81,970 square feet delivered over the same period in 2025.
What was the largest retail sale transaction in San Diego in Q2 2026?
The largest retail sale transaction in Q2 2026 was Poway Marketplace in Poway, a 79,853-square-foot property that sold for $26,483,197, or $331.65 per square foot. Litwin Management purchased the property from Fortress Investment Group and Prism Places. (Data source: CoStar)
What was the largest retail lease transaction in San Diego in Q2 2026?
The largest retail lease transaction in Q2 2026 was a 15,430-square-foot lease signed by Gym at Rancho Bernardo Town Center in the Carmel Mountain Ranch submarket, executed in April 2026, according to Kidder Mathews research.
What is the outlook for the San Diego retail market in Q2 2026?
San Diego’s retail market outlook remains stable heading out of Q2 2026, supported by low vacancy near 4.5% and a shrinking construction pipeline down 16.24% year-over-year, which should help limit new supply pressure even as near-term leasing demand remains soft.
Last updated: Q2 2026. Data source: CoStar. Compiled by the Kidder Mathews Research Group.
2Q 2026 San Diego Retail Market: Key Data Points
Explore our full San Diego retail market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Vacancy Remains Low: San Diego’s retail vacancy rate measured 4.5% in 2Q 2026, up just 20 basis points from 4.3% one year ago.
- Asking Rents Continue to Increase: Average asking rents reached $2.38 PSF per month, reflecting a 1.0% year-over-year increase.
- Development Pipeline Shrinks: Retail space under construction totaled 290,191 SF, down 16.2% year-over-year, signaling a slowing development pipeline.
- Construction Deliveries Decline: New retail deliveries reached 33,208 SF year-to-date, a 59.5% decrease compared with the same period last year.
- Investment Values Rise: Average retail sale prices increased to $446 PSF, representing a 12.8% year-over-year gain.
- Net Absorption Remains Negative: Year-to-date net absorption totaled -208,667 SF, reflecting ongoing leasing headwinds despite the market’s relatively low vacancy rate.
Market Breakdown
| Metric | 2Q26 | 1Q26 | 2Q25 | YOY Change |
|---|---|---|---|---|
| Vacancy Rate | 4.5% | 4.5% | 4.3% | 20 bps |
| Average Asking Rents/SF/Mo | $2.38 | $2.42 | $2.36 | 0.96% |
| Under Construction (SF) | 290,191 | 292,403 | 346,465 | -16.24% |
| Average Sales Price/SF | $446 | $320 | $395 | 12.81% |
| Average Cap Rate | 5.4% | 6.1% | 4.7% | 70 bps |
Market Breakdown — Year-to-Date
| Metric | 2Q26 | 2026 YTD | 2025 YTD | YOY Change |
|---|---|---|---|---|
| Construction Deliveries (SF) | 26,597 | 33,208 | 81,970 | -59.49% |
| Net Absorption (SF) | -22,131 | -208,667 | -559,493 | N/A |
Significant Sale Transactions 2Q 2026
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| Poway Marketplace | Poway | 79,853 | $26,483,197 | $331.65 | Litwin Management | Fortress Investment Group | Prism Places |
| Equinox | Carlsbad | 30,800 | $26,242,164 | $852.02 | 11North Partners | Bain Capital, LP | Asana Partners |
| Escondido Gateway | Escondido | 69,552 | $22,061,281 | $317.19 | Brixton Capital | Mountain Pacific Properties |
Significant Lease Transactions 2Q 2026
| Property | Submarket | SF | Transaction Date | Tenant |
|---|---|---|---|---|
| Rancho Bernardo Town Center | Carmel Mountain Ranch | 15,430 | April 2026 | Gym |
| El Toreador Plaza | Imperial Bch/South SD | 13,618 | May 2026 | AMVETS |
| Palomar Trolley Center | Chula Vista | 12,000 | April 2026 | ULTA Beauty |
Significant Under Construction
| Property | Submarket | SF | Delivery |
|---|---|---|---|
| 1895 Camino Del Rio South | Mission Valley | 106,688 | 3Q 2026 |
| Alexandria Wellness Center | Miramar/M Mesa/S Rnch | 45,000 | 3Q 2026 |
| 2013 4th Ave | Central San Diego | 30,000 | 3Q 2026 |
Data as of Q2 2026. Source: CoStar. Prepared by the Kidder Mathews Research Group.
ContactGARY BARAGONA |
Related ContentYou may also be interested in our other research: all retail market reports, San Diego industrial market report, San Diego multifamily market report, San Diego office market report, Inland Empire retail market report, Orange County retail market report, Los Angeles retail market report, San Diego office location. |