San Diego Industrial & Warehouse Market Report | Q2 2026
Key Takeaways
- San Diego industrial vacancy held at 7.2% in Q2 2026, unchanged from Q1 and down 40 basis points year over year, slightly above the U.S. average of 6.9%.
- Leasing jumped 37.4% in the quarter to 1.8 million SF, well above the five-year quarterly average of 1.3 million SF, but net absorption was only 36,520 SF.
- Average asking rent fell 1.8% in the quarter and 4.8% year over year to $1.44/SF/mo NNN. South County rents fell 6.9% on the year while North County rents rose 1.9%.
- About 1.4 million SF is under construction, including 744,000 SF in Otay Mesa, and another 6.6 million SF is proposed.
Browse warehouse space for rent in San Diego
7.2%
Overall Vacancy (Q2 2026)
$1.44
Avg. Asking Rent ($/SF/mo NNN)
36.5K
SF Net Absorption (Q2 2026)
1.4M
SF Under Construction
San Diego’s industrial market held steady in Q2 2026. Vacancy stayed at 7.2%, leasing rose sharply to 1.8 million SF, and net absorption was slightly positive. Move-ins such as Waymo’s 230,000 SF across three buildings were largely offset by move-outs, including Jeld-Wen leaving 110,000 SF in Vista and Honeywell leaving 101,000 SF in Otay Mesa. Rents kept easing, down 4.8% on the year.
Figures are from Cushman & Wakefield’s Q2 2026 San Diego Industrial MarketBeat unless noted. Vacancy includes sublease space. Prior-quarter comparisons use the figures as restated in C&W’s Q2 2026 reports. Rents are triple net (NNN) asking rates, quoted in $/SF per month by Southern California convention; C&W’s national table publishes the same rate as $17.28/SF/yr.
Market Snapshot: Q2 2026
| Metric | Q2 2026 | Q1 2026 (restated) | YoY or note |
|---|---|---|---|
| Overall vacancy (incl. sublease) | 7.2% | 7.2% | −40 bps YoY (7.6% in Q2 2025) |
| Direct vacancy | 6.7% | n/a | −10 bps YoY; sublease vacancy 0.5% |
| Direct availability rate | 8.8% | n/a | +40 bps YoY; sublease availability 1.6% |
| Avg. asking rent ($/SF/mo NNN) | $1.44 | $1.47 | −4.8% YoY; −1.8% QoQ |
| Net absorption | 36,520 SF | 4,933 SF | 41,453 SF year to date |
| New leasing activity | 1.8M SF | n/a | +37.4% QoQ; +44.8% YoY |
| Deliveries | 110,000 SF year to date | 110,000 SF | One building (U-Haul, Escondido); none in Q2 |
| Under construction | 1,424,130 SF | n/a | 6.6M SF more proposed |
| Investment sales | $217M | n/a | Average price $309/SF, +8% YoY |
| Industrial cap rate (Matthews/CoStar) | 6.4% | n/a | Different data basis from C&W |
| Inventory | 163.9M SF | n/a | Base for all rates above |
Source: Cushman & Wakefield, San Diego Industrial MarketBeat Q2 2026 (sales data from Real Capital Analytics). Q1 2026 and Q2 2025 values as restated in C&W’s U.S. Industrial MarketBeat Q2 2026 metro tables and the San Diego report. Cap rate: Matthews, San Diego Industrial Market Report Q2 2026, citing CoStar. n/a = not restated in the Q2 reports.
Rent Trends: Down 4.8% on the Year, With North County the Exception
San Diego’s average asking rent across all product types fell 1.8% in Q2 2026 and 4.8% year over year to $1.44/SF/mo NNN. Research and development space posted the largest annual decline, down 8.0%, followed by manufacturing, down 7.2%. By product type, warehouse/distribution averages $1.29, manufacturing $1.36, R&D $1.75 and incubator multi-tenant/flex $1.73.
The trend differs by region. South County rents fell 6.9% on the year and Central County rents 2.7%, while North County rents rose 1.9%. South County is the least expensive region at $1.18/SF/mo NNN; Central County is the most expensive at $1.78.
For Tenants
South County offers the most choice and the lowest rents, with 11.2% vacancy and an average asking rent of $1.18/SF/mo NNN, down 6.9% on the year. Central County is the tightest region at 5.1% vacancy. Warehouse/distribution space has the highest product vacancy at 9.8%, which gives distribution users more room to negotiate than manufacturing users. Search San Diego warehouse listings on WareCRE.
Construction Pipeline: 1.4M SF Underway, Mostly in Otay Mesa and East County
About 1.4 million SF was under construction across San Diego County at the end of Q2 2026, including 744,000 SF in Otay Mesa and 483,000 SF in East County. Another 6.6 million SF of projects is proposed, with Otay Mesa accounting for 59% (3.9 million SF). U-Haul’s 110,000 SF facility in Escondido is the only building to deliver this year.
C&W notes that tighter capital markets and labor constraints may delay some projects, and that developers are phasing construction to match expected improvements in market conditions. Most new supply in recent years has landed in South County, where vacancy has eased to 11.2% from a recent high of 13.6% in Q2 2025.
For Operators
Occupancy is stable but rents are still falling, so protecting occupancy matters more than pushing rate in most of the county. North County is the exception, with rents up 1.9% on the year. In Otay Mesa, 744,000 SF under construction and 3.9 million SF proposed mean more competing space ahead for South County owners. C&W expects demand to be strongest for spaces of 20,000–50,000 SF, which account for 23% of upcoming lease expirations.
Submarket Breakdown: Central County Tightest, South County Improving
C&W groups San Diego County into three regions and also reports by product type. The sections below cover each region and the product-type split.
Central County
The largest and tightest region at 72.0 million SF and 5.1% vacancy, with the highest average asking rent at $1.78/SF/mo NNN. It absorbed 78,058 SF in Q2, and its 659,863 SF pipeline includes the 483,000 SF underway in East County. Amazon leased 222,293 SF at 1756 Weld Blvd. in East County, and Waymo leased 73,756 SF in Morena. Miramar accounted for 11% of Q2 leasing.
North County
North County, including Vista, Carlsbad and Escondido, has 50.5 million SF at 7.0% vacancy and an average asking rent of $1.39/SF/mo NNN. Absorption was negative 164,201 SF in Q2, driven in part by Jeld-Wen vacating 110,000 SF in Vista. Rents are still up 1.9% year over year, the only region with an annual gain. Nordic Naturals leased 103,000 SF in Vista.
South County and Otay Mesa
The cross-border manufacturing and distribution hub on the Tijuana border, including Otay Mesa and Chula Vista, with 41.4 million SF. Vacancy is the highest in the county at 11.2%, but it has fallen from 13.6% a year earlier, and the region absorbed 122,663 SF in Q2. It has the lowest rents at $1.18/SF/mo NNN. Otay Mesa led the county with 17% of Q2 leasing, and Waymo leased 105,550 SF in Chula Vista. Honeywell vacated 101,000 SF in Otay Mesa.
By Product Type: Manufacturing Tight, Warehouse Softer
Manufacturing is the tightest product type at 4.4% vacancy and led year-to-date absorption at 216,479 SF. Warehouse/distribution vacancy is 9.8%, and the type holds nearly all of the county’s construction pipeline. R&D vacancy is 8.5% after negative absorption of 122,228 SF this year, and incubator multi-tenant/flex is 6.8%.
| Region / Type | Vacancy | Asking Rent ($/SF/mo NNN) | YTD Net Absorption (SF) | Under Construction (SF) |
|---|---|---|---|---|
| Central County | 5.1% | $1.78 | 33,433 | 659,863 |
| North County | 7.0% | $1.39 | -116,480 | 20,006 |
| South County | 11.2% | $1.18 | 124,500 | 744,261 |
| Warehouse/distribution | 9.8% | $1.29 | 134,974 | 1,404,124 |
| Manufacturing | 4.4% | $1.36 | 216,479 | 0 |
| R&D | 8.5% | $1.75 | -122,228 | 0 |
| Incubator multi-tenant/flex | 6.8% | $1.73 | -187,772 | 20,006 |
| San Diego total | 7.2% | $1.44 | 41,453 | 1,424,130 |
Source: Cushman & Wakefield, San Diego Industrial MarketBeat Q2 2026, market statistics table. Rents are overall weighted NNN asking rates.
Co-Warehousing & Flexible Warehouse Space in San Diego
San Diego’s flexible warehouse market is shaped by expensive, land-constrained coastal geography and a demand base heavy on life science, defense and small business. Small-bay, R&D and flex space near the urban core stays competitive because these users serve the local economy.
San Diego’s flexible-space tenants range from life science and med-tech companies needing R&D and lab-adjacent space to cross-border manufacturers and 3PLs at the Otay Mesa gateway. Last-mile and e-commerce operators, contractors and building trades, and defense and tech suppliers also lease flexible space.
Browse available co-warehousing and small-bay warehouse listings on WareCRE’s San Diego marketplace.
Looking for warehouse space in San Diego?
Key Trends to Watch
1. Leasing Jumped, but Move-Outs Kept Absorption Near Zero
Q2 leasing of 1.8 million SF was up 37.4% from Q1 and 44.8% from a year earlier, and well above the five-year quarterly average of 1.3 million SF. Net absorption was only 36,520 SF because large move-outs offset the new leases. C&W counts about 3.5 million SF of countywide tenant requirements over the next two years. Read more: Small-Bay vs. Big-Box: What the Vacancy Gap Means in 2026.
2. Manufacturers Signed 30% of First-Half Leasing
Manufacturers accounted for 30% of first-half leasing, ahead of transportation, warehousing and utilities (21%) and retail (17%). Manufacturing space is also the tightest product type at 4.4% vacancy. C&W calls manufacturing “a key driver of demand,” supported by defense, technology, life sciences and medical device production.
3. Otay Mesa Holds the Future Pipeline
Otay Mesa has 744,000 SF under construction and 3.9 million SF of the county’s 6.6 million SF of proposed projects. It also led Q2 leasing with 17% of volume. Its location on the border with Tijuana ties it closely to cross-border manufacturing. See How Tariffs Are Reshaping Warehouse Demand in 2026.
Outlook: What to Watch in Q4 2026
C&W’s Q3 2026 MarketBeats are due in mid-October, with the year-end release to follow.
Watch whether strong leasing turns into positive absorption. Leasing has been well above average, but absorption is only 41,453 SF year to date. With about 3.5 million SF of tenant requirements in the market, a larger positive quarter would be the first sign that vacancy is falling below 7.2%.
Watch whether rent declines slow. Rents fell 1.8% in Q2 after a smaller decline in Q1. The signal is whether North County’s gains spread or South County’s declines deepen.
Watch how quickly Otay Mesa’s new space leases. South County vacancy has already eased from 13.6% to 11.2%. The 744,000 SF underway in Otay Mesa will test whether that improvement holds.
Find warehouse space in San Diego
Browse co-warehousing, small-bay, and distribution listings across San Diego County.
Data sources: Cushman & Wakefield San Diego Industrial MarketBeat Q2 2026 (headline, regional, product-type, leasing, construction and sales figures; rents NNN, $/SF/mo; sales data from Real Capital Analytics); Cushman & Wakefield U.S. Industrial MarketBeat Q2 2026 (restated Q1 2026 and Q2 2025 figures, annual rent and the U.S. average); Matthews San Diego Industrial Market Report Q2 2026, citing CoStar data (cap rate only). Each report reflects the most recent vacancy, rental, and construction data available at the time of publication. We refresh our reports as new market data is released, and we’re continually expanding coverage to additional metros.
Related Resources
Frequently Asked Questions
What is the current industrial vacancy rate in San Diego?
San Diego industrial vacancy, including sublease space, was 7.2% in Q2 2026, according to Cushman & Wakefield, unchanged from Q1 and down 40 basis points year over year. The U.S. average in the same release was 6.9%. By region, vacancy ranges from 5.1% in Central County to 11.2% in South County.
How much does warehouse space cost in San Diego?
The average industrial asking rent across all product types was $1.44/SF/mo NNN in Q2 2026, down 4.8% year over year. Warehouse/distribution space averaged $1.29, manufacturing $1.36 and R&D $1.75. By region, averages run from $1.18 in South County to $1.78 in Central County.
Which San Diego submarket is best for warehouse space?
It depends on the requirement. South County, including Otay Mesa, has the most available space and the lowest rents at $1.18/SF/mo NNN, plus cross-border access. Central County is the tightest region at 5.1% vacancy and suits infill and last-mile users. North County, including Vista, Carlsbad and Escondido, is the only region where rents rose over the past year.
How much industrial space is under construction in San Diego?
About 1.4 million SF was under construction at the end of Q2 2026, including 744,000 SF in Otay Mesa and 483,000 SF in East County. Another 6.6 million SF is proposed, 59% of it in Otay Mesa. Only 110,000 SF has delivered so far in 2026.
What are industrial cap rates and sale prices in San Diego?
Matthews, citing CoStar data, reported an average industrial cap rate of 6.4% in San Diego in Q2 2026. Cushman & Wakefield, using Real Capital Analytics data, reported $217M of industrial sales in Q2 at an average price of $309/SF, up 8% year over year.
