San Diego’s industrial market has moderated over the past few quarters after averaging approximately 3 million SF in leasing activity since the start of 2020. In turn, the volume of tours, particularily for larger spaces, has slowed down. Tenants for industrial space are beginning to gain negotiating leverage again and receive tenant improvement allowances. However, tenants coming out of five-year leases are facing a challenging leasing environment with rents that have risen upwards of 50% for similar spaces. Due to higher rents and economic concerns, larger space users have become more cautious and many are trying to renew instead of seeking new space.
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