About the Region

Industrial space utilization continues to fall. For eight consecutive quarters, industrial spaces have experienced negative net absorption, which indicates that more space is being vacated than leased. Demand has fallen as manufacturing jobs decline while new developments come online following a surge in construction activity since the pandemic began. This has contributed to the increasing vacancy since Q2 2022. Despite the slump in demand and the larger supply of industrial space, asking rates still increased year-over-year. In Q2, the asking rates for industrial spaces were $1.43 and $1.84 per square foot for low-finish and high-finish, respectively.

San Diego added jobs overall, with declines in several key sectors. There has been a total of 8,900 jobs added since Q2 of last year, bringing total employment to 1.58 million. Despite overall employment rising, several key industries have shed jobs over the past year. The professional and business services sector saw the largest decline, losing 8,200 jobs, followed by manufacturing, which decreased by 3,900 jobs since Q2 2023, contributing to higher industrial vacancy rates. Other notable sectors experiencing job losses were in information and finance. Making up for these losses were gains in employment in the private education, healthcare, government, and leisure and hospitality sectors, totaling to 19,100 jobs added since Q2 2023.

Funding is on pace to surpass 2023 levels. In Q2, San Diego brought more than $1 billion in VC funding across 39 deals. Bolstered by a strong Q1 performance, startups have claimed $2.6 billion in VC funding through the first half of 2024, putting the region on track to exceed 2023’s total of $4.1 billion if the pace continues. Life Sciences startups claimed 60 percent of the funds in Q2. Leading all deals in the quarter with $132 million raised is Endeavor BioMedicines, founded in 2021.