SAN DIEGO, CA – Telecommuting has become an increasingly popular trend in San Diego as employees seek flexibility and companies look to reduce costs. This trend is having a significant impact on the commercial real estate sector, with negative net office absorption for five consecutive quarters.
According to the EDC’s Q3 2023 Economic Snapshot, San Diego’s office real estate sector experienced its fifth consecutive quarter of negative net absorption. This means there was more office space vacated than occupied.
There are several reasons for this trend. First, the cost of living in San Diego remains high, making telecommuting more attractive to employees looking for a more affordable place to live. Second, companies are beginning to recognize that telecommuting can be an effective way to reduce overall costs.
SANDAG’s report on Telecommuting Policies and Practices shows how the percentage of companies offering telecommuting options to their employees went from 27% before the pandemic to 47% during, and 57% after. This has led to an increase in office vacancy as companies cut back on space they don’t need.
In the third quarter of 2023, the San Diego office market experienced negative net absorption of 37,868 square feet. This figure largely recovered from previous quarters, but remains negative.
Office vacancy has been concentrated in areas such as UTC, Kearny Mesa and Del Mar Heights. These areas tend to be popular with technology firms and companies that require flexible office space.
However, the negative trend in net absorption is likely to continue for some time, the report details. Companies are beginning to realize that telecommuting can have a negative impact on collaboration and corporate culture.
