Market Trends
- The market’s vacancy rate increased 90 basis points year over year from 7.7% in Q4 2024 to 8.6% in Q4 2025. Deliveries outpaced net absorption year to date, keeping vacancy rates elevated.
- The largest project currently under construction is the 437,080-square-foot speculative development across two buildings at Otay Mesa Business Park, a size format that has not observed outsized tenant demand over the last four quarters.
- Given the market’s increased vacancy, smaller format tenant demand and relatively weak full year absorption for the third consecutive year, tepid-to-flat rent growth and increased concession packages can be expected.