COVID-19 has forced many businesses to re-evaluate financial plans with the uncertainty surrounding the pandemic, leading to thousands of employees being laid off and many shutting down operations completely. A vast majority of workers have transitioned to work from home and some companies have announced permanent remote work for employees going forward, according to a Kidder Mathews office report.

Moreover, the San Diego office market will continue to face challenges due to the impacts of COVID. The slowdown in demand and speculative development will apply additional upward pressure to the vacancy rate as office users navigate space needs this year. Leasing activity is expected to remain low in the coming quarters, and as such, annual rent growth could turn negative as landlords face pressure to lease out vacant spaces. Sublease availabilities will continue to rise, as companies re-evaluate office size requirements and assess future cost savings from reducing office footprints, says the report.