San Diego Office Market Report: Q1 2026

San Diego’s office market in Q1 2026 showed early signs of stabilization—vacancy held steady, absorption turned positive, and sales activity stayed active, though pricing reset sharply from last year’s elevated levels.

Key Takeaways

• Vacancy: 13.6% (down ~10 bps quarter-over-quarter), but still 60 bps higher year-over-year. 
• Availability: 17.1%, up 60 bps QoQ and 50 bps YoY, signaling more space is being marketed even as vacancy stabilizes. 
• Leasing volume: 1.0M SF, down 16.2% YoY and down 21.8% vs. Q4 2025. 
• Net absorption: +61.3K SF, rebounding from negative absorption in Q4—still selective demand, but moving in the right direction. 
• Average asking rent: $3.14/SF (avg asking), a modest increase vs. Q1 2025. 
• New deliveries: 75K SF in Q1 2026. 

Leasing: Downshift in Volume, Not in Demand

Leasing totaled 1,013,774 SF in Q1 2026 versus 1,209,850 SF in Q1 2025, reflecting a slower quarter overall. 

Even so, the market returned to positive net absorption (+61,344 SF) after posting negative absorption last quarter, suggesting that tenant demand—while cautious—continues to support pockets of stabilization. 

Vacancy and Availability: Stable Vacancy, More Space Competing

Vacancy held essentially flat at 13.6%, but total availability climbed to 17.1%. 

In practice, this typically means tenants still have options, and landlords—especially in older or less competitive assets—may need stronger concessions or upgraded offerings to compete.

Sales: Activity Up Big YoY, Pricing Resets

Sales volume reached 2,274,557 SF in Q1 2026, up 186.4% YoY (vs. 794,137 SF in Q1 2025). 

However, pricing normalized sharply: average price per SF was $215.21 in Q1 2026 versus $462.67 in Q1 2025. 

That combination—higher activity, lower pricing—reinforces that capital is active, but still highly price-sensitive. 

Notable Transactions to Watch

Significant sales (Q1 2026):

• Kilroy Sabre Springs (Rancho Bernardo): 438,516 SF sold for $124.5M ($283.91/SF). 
• One & Two Columbia Place (Downtown): 707,623 SF sold for $103.5M ($146.26/SF). 

Significant leases (Q1 2026):

• Northrop Grumman leased 168,072 SF in Rancho Bernardo (Via Del Campo Ct). 
• Colliers leased 19,059 SF in UTC (4350 La Jolla Village Dr). 

Economic Backdrop

San Diego County unemployment was 4.4% in December 2025 (down from September, slightly above the year-ago level). 

The metro added 5.5K jobs YoY to reach 1,584.1K total nonfarm employment, though office-using sectors were mixed (Professional & Business Services down 6.2K, while Education & Health Services up 15.1K). 

IPG Read: What This Means for 2026

Kidder Mathews’ outlook expects continued unevenness: demand is strongest for well-located, upgraded assets, while older properties face pressure, and investment activity is likely to focus on discounted urban opportunities and value-add suburban assets, with limited new development primarily in medical office.