Q1 2015 San Diego Office Market Statistics: Steady rent growth continues

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Rent continued to increase as the supply of large blocks and high-end Class A space continued their decline.


Q1 Highlights:


  • The San Diego office market reported slightly negative net absorption of 5,258 SF this quarter.
  • 4.0 million SF of tenants are currently in the market, the majority of which are technology companies. 3.3 million SF of tenants are expected to land or sign a deal in the next 12 months.
  • Largest concentration of tenants in the market are looking in the North Cities market
  • Overall asking rent growth continues at 1.7% quarter-over-quarter and 5.3% year-over year. Class A rent growth even larger at 2.6% quarter-over-quarter.


  • Construction continues on two speculative office projects. Cruzan’s MAKE in Carlsbad is a 177,269 SF office redevelopment project that is scheduled to deliver Q2 2015. Kilroy’s The Heights Del Mar is a 74,895 SF, 3-story office building set to deliver in Q4 2015. No pre-leasing has been announced.
  • Construction continues on Sempra Energy’s new headquarters in Downtown. The 320,000 SF building is scheduled to deliver Q3 2015.
  • The Irvine Company’s One La Jolla Centre is nearly complete. The 14-story office tower is set to deliver Q2 2015, adding 306,000 SF of new office inventory to the UTC submarket. 22,000 SF (a full floor) was leased this past quarter.
  • Occupancy county-wide is at 86.5%, returning to pre-recession levels.
  • There is 878,164 SF of office space under construction, including Sempra Energy’s BTS and the three speculative office projects. 39% of these properties are pre-leased.

Capital Markets

  • Sales volume decreased 54.0% quarter-over-quarter.
  • Cap rates increase to 6.75%, up from 6.67% average QoQ, up from 6.53% YoY
  • Average Price per SF up to $268
  • Canada, Turkey, and Mexico were all cross-border investors in the past 12 months.
  • Buyer type YTD split between institutional (31%) and private (67%).
  • Starwood Capital, Prudential RE Investors top buyers in prior 24 months
  • Blackstone, Kilroy Realty Corp top sellers in prior 24 months

Click here for more market insight on our San Diego research group web page: San Diego – Research.

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