The San Diego Commercial Real Estate Market

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Investors and tenants across sectors are turning to San Diego, California, as a commercial real estate market ripe with opportunities. 

The Southern California city is among the top ten biggest in the country, home to sizable employers and small businesses. Crexi offers investors, tenants, and other property seekers a window into San Diego’s bustling commercial real estate market, giving them the tools to identify and acquire the best assets.

Crexi also aids brokers and those representing San Diego property with a powerful marketing vehicle, including tools to maximize assets’ exposure and close more deals. To date, brokers have used Crexi to close more than $330 billion in commercial real estate listings and to market over $2 trillion in property value.

Crexi proudly supports San Diego, Escondido, Carlsbad, El Cajon, Chula Vista, and the surrounding communities as the region’s fastest-growing digital CRE platform.

downtown San Diego from the view of a highrise

The State of San Diego Commercial Real Estate 

San Diego’s coastal location and mild climate make it a great place to live, work and start a business. Thanks to its strong economy, San Diego offers almost unlimited potential for businesses and entrepreneurs. The city is home to several large companies, including Qualcomm, Illumina, Sempra Energy, and some smaller start-ups. San Diego’s proximity to Mexico makes it an ideal location for businesses looking to tap into the Mexican market or take advantage of NAFTA benefits.

The metro area offers a stunning selection of properties for those interested in investing in San Diego commercial real estate. The city’s population is increasing, and the demand for rental units and office spaces has never been higher. With the numerous amenities available in San Diego, such as access to beaches, mountains, and other attractions, investing in commercial real estate can be a smart move for any business owner or investor looking to capitalize on this vibrant region’s growth potential. 

Donwtown san diego at sunset with a view of the bay and apartment buildings

San Diego Regional Breakdown

The population of San Diego Country has grown exponentially, with a massive 6.6% population increase according to the most recent census results – outpacing growth within California itself. In 2020, 3.3 million people called this metropolitan region home which is an impressive jump from its former figure in 2010 of: 3.1 million individuals:

  • Nearly 1.4 million reside in the City of San Diego, with about 3.3 million in San Diego County.
  • San Diego is the second most populous city in California, just behind Los Angeles, and the fifth most populous in the US.
  • Major cities in the metropolitan area include Chula Vista, Oceanside, Escondido, Carlsbad, and El Cajon.
  • Over 88% of the residents are high school graduates or higher, while 42% of the population holds a bachelor’s or advanced degree, about 20% higher than the rate in California.
  • The median age in San Diego is 36.9, about the same as in California. 

San Diego Job Market

Situated near Mexico and boasting a dynamic innovation economy, San Diego is fast becoming one of the most multicultural cities in America. According to the City of San Diego, the region’s proximity to foreign talent combined with its recruitment potential enables it to attract people from all over the world, making it an incredibly diverse location for those who choose to live, work, and invest there.

  • The employed population of San Diego is nearly 1.6 million, growing by 0.3% year over year.
  • The poverty rate decreased by 5.75% over the past year, while unemployment in San Diego is down to 3.3%, according to the US Bureau of Labor Statistics.
  • Job sectors showing the most substantial growth include professional and business services, education and health care, information, leisure and hospitality, and government.
  • GDP for San Diego-Carlsbad is nearly $268 billion, increasing by 54% over the past ten years.
  • Alongside its neighbor Tijuana, San Diego forms one of America’s largest metropolitan areas at their shared border – making it exceptionally suitable to reap all the benefits of NAFTA.
  • San Diego’s economy is anchored by the international trade, manufacturing, military, and tourism sectors.
  • Largest employers include the US Navy, Pulse Electronics, Scripps Health, Qualcomm, Cubic Corporation, Kaiser Permanente, and the University of San Diego.
  • University of California San Diego, San Diego State University, and UC San Diego School of Medicine are among the many private and public schools in the metropolitan area.
  • San Diego has been ranked as one of the top life science and biosciences locations and one of the most inventive cities in the world.
  • The region’s location on the Pacific Ocean near Mexico helps make San Diego ideal for international trade and business.
  • The Port of San Diego is home to three major terminals, with growing cruise ship and cargo operations.
  • San Diego is served by daily freight and passenger rail service, over 80 trucking companies, ten major interstate and state highways, local ferries and trollies, and the San Diego International Airport.
A view of downtown san diego and coronado island

San Diego Industrial Market

High demand for industrial property in San Diego is driving rents to new heights, fueled by the life science and logistics sectors. Kidder Mathews reveals that landlords continue to benefit from this tight market as tenants fight for space, pushing rental rates higher quarter after quarter:

  • Total industrial inventory: 198,558,807 SF
  • Average asking rent: $1.40/SF per month NNN, increasing 14.75% year over year
  • Vacancy rate: 3.3%
  • Absorption: 1,495,952 (through Q3 2022)
  • Leasing activity: 7,441,623 SF
  • Key lease transactions by tenant: Suarez 124,068 SF, ShipLab 86,465 SF, Southland Envelope Co. 72,783 SF
  • New construction: 2 million SF delivered with nearly 2.6 million SF currently under construction
  • Investment sales trends: $1.2 billion year to date, market cap rate 5.0% (NAR) 
  • Largest industrial submarkets: Otay Mesa, Mira Mesa/Miramar, Carlsbad

Discover San Diego industrial space for lease.

a high rise multifamily apartment in san diego

San Diego Office Market

Occupancy in the San Diego office market has increased for seven consecutive quarters, with Class A office space showing the most significant gains in the lastmost recent quarter. According to Cushman & Wakefield, asking rents have increased year over year with significant demand coming from the technology sector:

  • Total office inventory: 83,702,358 SF
  • Overall average asking rents: $3.62/SF per month, full-service gross
  • Vacancy rate: 13.4%
  • Absorption: 828,302 SF (through Q3 2022)
  • Leasing activity: 4,525,113 SF year to date
  • Key leases by tenant: Crinetics Pharmaceuticals 94,230 SF, Apple 64,832 SF, Plexium 50,831 SF
  • New construction: 599,140 SF delivered YTD, with 6,080,101 SF currently under construction
  • Investment sales trends: $637 million in acquisitions in Q3 2022, market cap rate 6.2% (NAR Commercial Metro Market Reports Q3 2022)
  • Largest office submarkets (CBRE): Central San Diego, Downtown, North County

Discover San Diego office space for lease. 

San Diego Retail Market

Retail leasing and investment sales volumes in San Diego are growing, continuing a trend that began in the middle of 2021. As REI Business Online reports, all major retail categories are expanding, with suburban shopping centers benefiting from people working from home. 

The average price per square foot for retail properties surged by nearly 31% year over year, with 21 shopping centers changing hands in Q3 2022 alone. Here are the most recent San Diego retail market stats from Cushman & Wakefield and the NAR:  

  • Total retail inventory:  80,782,906 SF
  • Average asking rent: $2.10/SF per month, NNN
  • Vacancy rate: 5.0%
  • Absorption: 885,689 SF year to date
  • Key leases by tenant: Dollar Tree 13,795 SF, Luxury Outdoor Solutions 10,368 SF, Crab Pub 10,200 SF
  • New construction: 334,750 SF under construction
  • Investment sales trends: $402 million in acquisitions in Q3 2022, average sales price $406/SF, cap rate 5.4%
  • Median household income: $91,003, with 46% of households earning $100K per year or more

Discover San Diego retail property for lease.

a few boats parked dockside in San Diego's harbor

San Diego Multifamily Market

Multifamily vacancy in San Diego is at a 5-year low, with asking rents continuing to increase and new development remaining solid and steady as buildings strive to meet apartment demand, according to Northmarq. Surging employment in the metro area and a decrease in the number of units in the pipeline could bode well for investors looking for apartments buildings for sale in San Diego:

  • Total housing units: 1,237,685
  • Renter occupied: 46%
  • Multifamily inventory: 569,335 units
  • Average asking rent: $2,285
  • Rent growth: 12.6% year over year
  • Vacancy rate: 3.3%
  • New construction: 2,871 units delivered YTD, with 4,431 units under construction 
  • Investment sales trends: Median sales price $355,600/unit, up 10% year over year, with cap rates holding steady at 3.5%
  • Recent sales activity: The Madison $34 million, Park East Apartments $23.5 million, Nook East Village $20.1 million 
  • Per capita income: $44,377
  • Median age: 36.9, a little less than the figure in the US

Discover San Diego multifamily property for sale.

Want more data? Get more insights into the San Diego commercial real estate market with Crexi Intelligence.

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Shanti Ryle
Shanti Ryle

Content Marketing Manager

Shanti leads Crexi's content marketing strategies with 7+ years of content development experience, creating everything from blog posts to award-winning podcasts. Previously, she worked on content teams at Snapchat, Weedmaps, and HopSkipDrive as well as developed copy, articles, and media for freelance publications.

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