The San Diego office market is beginning to show the early signs of recovery. In the second quarter office absorption moved into the black and was double the absorption from the third quarter 2020, according to a report from JLL.
Class-A office has 154,011 square feet of net absorption, fueled largely by tech companies leasing space in Eastgate, Del Mar Heights and Rancho Bernardo. Those three markets also have 526,000 square feet of new tenant move-ins scheduled for later this year, which will help to further drive leasing velocity. In addition, the sublease supply fell 30 basis points, now accounting for about 2.5% of the total office leasing market. Together, this activity points to a slowly recovering office market.
In addition to improved leasing activity, direct asking rents also increased in the second quarter, up to $3.25 per square foot. This increase was largely due to new office deliveries and the conversion of dated properties into biotech space, a trend that has reduced office space by 1.1 million square feet since 2019. Class-A rents increased 3.2% year-over-year, driven by activity in UTC, Sorrento Mesa and
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Kelsi Maree Borland
