San Diego's Life Science Boom Meets a Tenant's Market
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The BIO International Convention wrapped its final day Thursday at the San Diego Convention Center, drawing national and international investment attention to the region's life science sector at a moment of genuine market stress. Lab and research space vacancy has climbed to 26.6 percent countywide — among the highest levels in the sector's history here. Sublease availability did fall from 1.9 million square feet to 1.5 million square feet year over year, suggesting some worst-case scenarios about tenants dumping space have not fully materialized, but the headline vacancy figure remains a significant concern for landlords.
The one active construction project in the pipeline offers a counterpoint: a 466,592-square-foot building in UTC has been preleased to Novartis, a major pharmaceutical company making a substantial commitment to San Diego real estate despite the soft market. The broader office sector tells a parallel story — vacancy sits at 20.1 percent and direct availability has hit a new record of 17.1 million square feet, with hybrid work still reshaping the commercial landscape.
San Diego's industrial market stands apart as the sector's clear bright spot. The city posted its third consecutive quarter of positive net absorption in Q1 2026, driven largely by a 1.1-million-square-foot Amazon facility that delivered fully leased during the quarter. Total industrial vacancy sits at 7.6 percent, though average asking rents have fallen for five consecutive quarters to $1.41 per square foot, triple-net, as landlords compete for tenants. The convention's broader significance, beyond individual deals, was reinforced by Element Biosciences securing $175 million from Samsung ahead of the event — the kind of capital commitment that sustains the ecosystem even when real estate numbers are soft.