San Diego’s Commercial Real Estate Shines: A Story of Resilience and Opportunity

In a national landscape where commercial real estate has faced unprecedented challenges, San Diego stands out as a beacon of resilience. A recent report highlighted in GlobeSt.com reveals a striking fact: San Diego currently boasts the lowest office vacancy rate among all major U.S. markets [1]. As a real estate broker deeply embedded in this market, this news is not surprising. It’s a testament to our region’s unique economic strengths and dynamic evolution. This article offers an expert analysis of what this trend means for investors, business owners, and the future of San Diego real estate.

A Tale of Two Markets: Downtown vs. Suburbs

The most compelling narrative within San Diego's office market is its clear bifurcation. While downtown is experiencing rising vacancy rates due to a recent influx of speculative new builds, the suburban Class A market is thriving. This “flight to quality” is a dominant theme, with tenants gravitating toward newer, highly-amenitized buildings in prime locations like University Town Center (UTC), Del Mar Heights, and Mission Valley. These areas are seeing minimal vacancy and commanding higher rents, proving that quality and location remain paramount.

This divergence creates a fascinating landscape of opportunity. While the downtown area presents challenges, it also offers what the JLL report calls “generational opportunities for value investors.” Obsolete downtown assets are trading at significant discounts, offering a low entry point for those with a vision for redevelopment or repositioning.

The Innovation Economy: San Diego’s Driving Force

What fuels this resilience? The answer lies in our robust and diverse innovation economy. Technology and defense companies alone account for 28% of all office occupancy in the county [1]. With a staggering $17.7 billion in tech funding flowing into the region between 2020 and 2025, it’s clear that San Diego is a powerhouse of growth. This leasing activity is particularly strong in suburban tech hubs like Sorrento Mesa and Rancho Bernardo, further bolstering their market strength.

This powerful economic engine insulates our commercial real estate market from the severe downturns seen in other parts of the country. As long as San Diego continues to be a leader in tech, life sciences, and defense, the demand for high-quality office space will remain strong.

Transformation and Adaptation: The Future of Office Space

Another key factor in San Diego’s success is our market’s ability to adapt. Over nine million square feet of underutilized office space is being converted into biotech labs, housing, and medical facilities [1]. This creative transformation is not only helping to stabilize overall vacancy rates but is also addressing other critical needs within our community, such as the housing shortage and the demand for specialized lab space.

This trend highlights a forward-thinking approach to real estate that will ensure the long-term health of our market. Instead of letting old buildings sit empty, we are reimagining their purpose and creating new value.

What This Means for You

•For Businesses: If you are looking for office space, the suburban markets offer premium quality and a vibrant ecosystem. However, don’t overlook the potential of downtown. With landlords offering concessions and a variety of spaces available, it could be the perfect time to secure a prime location at a competitive rate.

•For Investors: The current market offers a spectrum of opportunities. From stable, high-performing assets in the suburbs to value-add plays in the downtown core, there are numerous avenues for strategic investment. The key is to understand the nuances of each submarket and align your investment strategy accordingly.

The San Diego Advantage

San Diego’s commercial real estate market is a story of strength, innovation, and opportunity. Our diverse economy, coupled with a proactive approach to market challenges, has positioned us as a leader on the national stage. Whether you are a business owner looking to expand or an investor seeking your next opportunity, the San Diego market offers a compelling proposition.

Curious to learn more about the opportunities in San Diego’s commercial real estate market? Contact our team today for a personalized consultation and in-depth market analysis.

Reference:

Based on “San Diego Commands Lowest Office Vacancy Among Major US Markets,” read the full article here: https://www.globest.com/2026/01/07/san-diego-commands-lowest-office-vacancy-among-major-us-markets/

Sources:

[1]: # "GlobeSt.com, “San Diego Commands Lowest Office Vacancy Among Major US Markets,” January 7, 2026."