Despite one of the largest office space vacancies in downtown San Diego in modern history, developers continue to flood the downtown area with fancy new office buildings. Bosa’s 167,000 square-foot Paladion is the perfect example of an office building project that is struggling to attract tenants. The building, designed with tech worker efficiency in mind, has four floors naturally lit from the sun shining in on the floor-ceiling glass windows. It’s also equipped with a restaurant and underground parking.
The Paladion is not unique, however. Thanks to the COVID-19 pandemic wreaking havoc on the economy, many businesses were either forced to close completely, temporarily, or have their employees telework from home for the duration of the pandemic. According to Tony Russell, an executive with Jones Lang LaSalle, office activity during the past year was effectively at a standstill, with no major deals signed in 2020.
Currently, downtown San Diego houses 12.3 million square feet of office space, not including projects developing more office space. As it stands, more than 19 percent of available office spaces are empty. If you were to factor in inventory currently under construction and sublease opportunities, there is almost five million square feet of available office space. So, why do developers keep developing?
Many who are investing now don’t see the current situation as the entire picture, and are instead looking five to ten years down the road. San Diego is a developing downtown area. With the area focused on biotechnology and life sciences, many are predicting that new office spaces will attract companies from outside the state, or even outside the country.
Investments in downtown areas with the growth and potential had by San Diego should come as no surprise, though the vacancy rates are currently alarming to most. Prior to the pandemic, the mayor’s office was predicting doubling the population size within the next 20 years. If this becomes reality, office vacancies will fill up and downtown San Diego condos will become hard to come by.