San Diego Sees Strong Office Development, Steady Sales

The San Diego office market started 2026 on a strong note, with solid development and investment activity in the first two months of the year, according to Yardi Matrix.

Robust construction kept San Diego office space metro among the nation’s most active, driven by large life science projects that continue to fuel demand for lab space. Investments also held steady, building on 2025’s momentum.

At the same time, vacancy continued to rise above national levels, highlighting ongoing absorption challenges amid elevated asking rents. Meanwhile, coworking outperformed U.S. levels, underscoring growing demand as workplace strategies continue to evolve.

Large-scale projects keep San Diego on top

San Diego’s development pipeline included nearly 1.8 million square feet across eight projects at the end of February—representing 1.5 percent of existing stock. However, office completions amounted to just 169,750 square feet in the first two months of the year.

Among similar markets, America’s Finest City ranked fourth for office construction. Dallas had the largest development pipeline at 2.7 million square feet, while the Bay Area (2.6 million square feet) and Houston (2.5 million square feet) rounded out the top three.

Meanwhile, the competitive office segment of San Diego’s pipeline comprised 1.2 million square feet. This accounted for 1.2 percent of existing stock—three-fold the national average of 0.4 percent.

The metro ranked fifth nationwide for competitive office development. Boston still led the ranking with 3.9 million square feet in the pipeline, followed by Manhattan (2.8 million square feet), Dallas (2.4 million square feet) and Los Angeles (2.1 million square feet).

San Diego’s largest project currently underway is the 466,000-square-foot life science development at 10260 Campus Point Drive. Alexandria Real Estate Equities broke ground on the build-to-suit project for Novartis in February 2026 and completion is scheduled for 2029.

The site is part of the Campus Point by Alexandria Megacampus in the city’s University Town Center. The pharma company signed the 16-year, full-building lease in July 2025, in what was the largest life science lease in Alexandria’s 31-year history.

The market’s second-largest development is within the same megacampus, at 4135 Campus Point Drive. The 426,927-square-foot building, under construction since 2023, is expected to come online this September.

San Diego office sales keep steady

Office investment activity reached $347 million as of February, placing the metro on the fourth position among the top 25 U.S. markets. America’s Finest City was surpassed by Manhattan ($1.6 billion in sales), the Bay Area ($680 million) and Miami ($666 million).

Among similar markets, San Diego ranked second after the Bay Area while surpassing Charlotte ($322 million), Houston ($295 million) and Dallas ($226 million). Nashville had the smallest investment volume, at $8 million.

Assets sold at $206 per square foot on average in February—below the $218 national figure. Peer markets that stood out for sale prices included Charlotte ($477 per square foot), the Bay Area ($302 per square foot) and Atlanta ($211 per square foot), while properties in Nashville ($162 per square foot) and Phoenix ($160 per square foot) sold for less. Austin emerged as the most affordable metro, with assets trading at $24 per square foot in February.

Since the start of 2026, the largest San Diego office transaction was the $104 million sale of One & Two Columbia Place in the city’s downtown area. GANMI Corp.’s Golden Columbia purchased the 707,623-square-foot pair of towers from Regent Properties. The two properties previously changed hands in 2021 for $223.5 million.

Rising vacancy contrasts with strong rent performance

As of February, the office vacancy rate in San Diego clocked in at 21.9 percent—well above the 17.6 percent national rate. The index marked a 120-basis-point year-over-year increase.

America’s Finest City was among the few markets with office vacancies above 20 percent. The highest rate among similar metros was recorded in Austin (24.6 percent) and the lowest in Tampa, Fla. (14.3 percent).

Asking rents averaged $45.18 per square foot, up 4.9 percent over the year. The value, well above the $32.79 national figure, placed the metro on the seventh position among the top 25 metros. Manhattan led with $73.45 per square foot.

Peer markets with more expensive rents included the Bay Area ($52.67 per square foot) and Austin ($46.37 per square foot), while Houston ($28.37 per square foot) and Orlando ($26.31 per square foot) stood out as more affordable.

Leasing activity since the start of 2026 included a 168,072-square-foot renewal signed by Northrop Grumman Systems. The defense and aerospace contractor further committed to the properties at 16710 and 16750 Via Del Campo Court, which is has occupied since 2005. Drawbridge Realty is the landlord.

Coworking share outpaces national benchmark

As of February, San Diego’s coworking footprint totaled 2.9 million square feet across 151 locations, accounting for 2.7 percent of the metro’s total leasable office inventory, according to CoworkingCafe. This share surpassed the 2.3 percent national average. Among similar markets, the largest out-of-inventory share was recorded in Nashville (3.3 percent).

Dallas led the peer markets in coworking square footage, with 6.7 million square feet. Atlanta followed with 5.6 million square feet, while Houston posted a sizable 5 million square feet of flex space. San Diego, meanwhile, outpaced Nashville (2.1 million square feet), Austin (2 million square feet) and Charlotte (1.8 million square feet).

Regus maintained its position as the top flex office provider in San Diego, with 371,166 square feet across its locations. Other operators included M.C. Strauss Co. (265,623 square feet), Spaces (133,293 square feet), Premier Workspaces (126,457 square feet) and HQ (112,726 square feet).