San Diego's office vacancy rate keeps climbing
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The vacancy rate for San Diego office space is still going up.
Why it matters: Reduced demand for office space after the pandemic is shaking up the region's real estate market, with major property owners downtown selling off towers at a loss and new, big projects struggling to find tenants.
By the numbers: The San Diego metro area's office vacancy rate reached 21.1% in 2024, continuing a steady upward trajectory since 2015 that accelerated after 2020, per Moody's latest report.
Zoom in: Vacancies are even higher in downtown San Diego, according to CBRE's end-of-year analysis, but Matt Carlson, a San Diego-based CBRE executive VP, said downtown is basically a split market.
- "The B Street corridor is struggling," he said. "There's no question about that."
- New buildings or recent renovations on the West side of downtown, on the other hand — walkable to Little Italy, with a smaller homeless population — also have healthy vacancies.
- "There is a massive difference between a 50% occupied B Street building and a 90% occupied West side building. It's like a different sport."
Moody's recommends demolishing out-of-date office buildings, or converting them into apartments, which tends to be easier said than done.
- But the firm's head of commercial real estate economics said reduced demand for office space is permanent.
State of play: The Irvine Company dumped two office towers on Broadway late last year, as the Union-Tribune reported, for about 35% of what they paid for the buildings in 2005.
- "You're seeing private capital come in and scoop these up at generational buying opportunities," Carlson said.