San Diego saw a positive sign for the local labor market; labor force participation increased by 10,000 people in August. Typically seasonality in San Diego sees participation fall during August over the past 10 years. Four sectors saw job losses, led by trade, transportation, and utilities, which was down 600.
New leasing has begun to slow throughout parts of San Diego and about 1/3 of submarkets finished the quarter with negative net absorption. Biotech has been a driving force of demand in San Diego, however, investment has cooled off in 2022, and the pace of biotech is likely to return to more pre-pandemic norms.
Annual rent growth remains firmly above the long-term average and rate of inflation, and at 13.9% compares to the national rate of 11.6%. Tenants coming out of five-year leases are facing a newer, challenging leasing environment with rents that have risen upwards of 50% for similar space.
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