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After A Slow First Half, San Diego Office Picks Up In Q3

San Diego's office market perked up in Q3 after experiencing relatively moderate leasing activity in the first half of the year, according to the latest report from Savills Studley.

Office interior

Life science and biotech companies drove much of the Q3 activity, and short supply made tenants more aggressive in pre-leasing space in buildings set to come online.

"The region now only has four non owner-user properties totaling just over 200K SF underway," according to the report. "Nearly 75% of the space in these buildings is pre-leased."

Overall leasing in San Diego reached just more than 1M SF for the quarter, a 0.3% increase from Q2. Leasing for the four most recent quarters was 5.6M SF, below the long-term average of 6.6M SF. Overall asking rents remained at $2.71/SF, or $32.48/SF a year.

Major leases so far this year included Takeda Pharmaceutical's nearly 164K SF pre-lease for all of Alexandria Real Estate Equities' two-building campus in University Towne Centre at 9625 Towne Centre Drive late in the second quarter.

Amazon signed on for nearly 107K SF of flex space in September at Campus Pointe 1 at 10300 Campus Point Drive in UTC. The top 10 leases in the county totaled around 494K SF.

Office property sales have totaled $873M so far this year, down 57% from the $2B sold during the same period last year.