San Diego’s industrial market is currently facing significant challenges, with prolonged negative absorption now reaching a fifth consecutive quarter—the longest streak since the Great Recession. High-profile vacancies, particularly from Amazon and biotech firms, have driven total vacancy rates upward, and larger spaces above 50,000 square feet are struggling to rebound to pre-pandemic leasing levels. Many landlords of these large facilities are prioritizing cost control over leasing, which has led to increased availability. In contrast, smaller multi-tenant properties, especially in North County’s incubator parks, maintain high demand and low vacancy rates, with sublet space in flex and lab buildings hitting a 20-year high.
Looking ahead, construction in 2024 will add significant new flex and industrial spaces concentrated near the Otay Mesa port of entry. While demand in Otay Mesa remains robust, broader economic uncertainties might delay a substantial market recovery until 2025. Rent growth has stabilized to long-term averages, reflecting an overall market settling into a pattern of contrasting dynamics between small-bay properties and large logistics facilities.
For companies seeking space in San Diego’s industrial market, SanDiegoLabSpaces.com offers a strategic advantage. Their team can help businesses navigate this complex landscape by providing access to available properties that meet their unique needs, especially in high-demand small-bay and multi-tenant spaces. SanDiegoLabSpaces.com’s agents bring deep local market insights, helping clients find spaces that align with current trends and emerging opportunities.
From an occupier’s perspective, tenants facing high renewal rents can benefit from strategic negotiation tactics in this shifting market. SanDiegoLabSpaces.com’s agents work with clients to secure favorable terms, helping smaller tenants in high-demand spaces and larger tenants leveraging the rising availability. Whether it’s securing short-term leases or navigating concessions, SanDiegoLabSpaces.com is committed to helping clients achieve cost-effective and strategically beneficial leases in San Diego’s evolving industrial landscape.
