Over 2.2 Million Square Feet of Office Sublet Space Has Been Listed on the Market
San Diego’s economy has experienced several hiccups since it started reopening in May, and many of the region’s office workers remain firmly planted in front of home computers. Area businesses continue to evaluate social distancing protocols within their space. This has led to firms reassessing their office space requirements in an era when fully functioning office environments remain a thing of the past.
And it’s amid that environment that San Diego has been bracing for a wave of office sublet space to hit the market as business revenues shift and economic uncertainty reigns. Many tenants will be forced to shutter or downsize given the instability.
In early August, a total of 2.2 million square feet of office sublet space in San Diego was listed, according to CoStar research. That’s an increase of 12%, or about 230,000 square feet compared to the same time last year. That was only the second time in six years office sublet space in San Diego exceeded 2 million square feet.
For comparison, the current level of available sublet space is similar to what the region saw during the height of the Great Recession, when 2.3 million square feet was regularly available between 2008 and 2009.
The recent bump in sublet space was driven by two availabilities. In Sorrento Mesa, American Specialty Health put its 200,000-square-foot space at the Elements at Wateridge up for sublease. That came after La Jolla Pharmaceuticals placed its 80,000-square-foot space at Axiom in University Town Centre on the market.
Those spaces came to market amid a pandemic and county-wide vacancy rate north of 10%. This translates to a four-year high in vacancy, along with an availability rate above 14%, a five-year high.