JLL: San Diego Healthcare Sector is Thriving

Despite recent economic headwinds, a new report from JLL shows that demand for outpatient care in San Diego has continued its upward trend. Leasing activity is outpacing new construction and existing supply, keeping downward pressure on vacancy and promoting rent growth.

The first quarter of 2022 saw slight positive net absorption of 5,500 square feet while San Diego County vacancy remained flat at 5.8%. Meanwhile, the average rent increased 3.4% compared to Q4 2021, now standing at $3.95 FSG and up to $4.64 FSG for a Class A building.

Leasing activity in the U.S. is now trending heavily off of hospital campuses, reflecting patients’ desire to find care closer to home. JLL reports that in San Diego, the average off-campus rental rate has now surpassed that of on-campus rates.

Finally, high construction costs continue to plague the market, but with sluggish office leasing, JLL sees strong potential that there will be a slowing in cost escalation.