Economic Overview
San Diego employment increased by 10,900 jobs, or 0.7% year-over-year (YOY), between August 2025 and August 2026, reflecting modest growth that continues to trail historical trends, while supporting steady demand for medical office space. Health care led employment gains, adding 12,300 jobs (+5.0% YOY) and reinforcing demand for outpatient, clinical and specialty care facilities. The unemployment rate declined modestly to 4.9% from 5.1% a year earlier but remained above the Q3 2026 average of 4.5%, reflecting a stable but subdued labor market. Ongoing growth in health care employment continues to support medical office demand, even as broader office-using sectors face challenges.
Looking ahead, employment is projected to grow by 1.0% in 2026 and 0.8% in 2027, both below the five-year historical average of 1.8%. Despite slower overall job growth, demographic trends, an aging population and sustained demand for health care services are expected to support stable medical office fundamentals.
Supply and Demand
Supply and demand conditions in San Diego's medical office market continue to reflect the health care sector's resilience amid economic uncertainty. Rising demand for care, both nationally and regionally, is creating opportunities for investors and occupiers that can effectively manage operating costs while adapting services to evolving patient needs and demographics. At the end of Q3 2026, the overall vacancy rate was 6.8%, up 10 basis points (bps) quarter-over-quarter and 40 bps YOY. North County (9.1%) and the I-15 Corridor (8.4%) recorded the highest vacancy rates, while South County remained the lowest at 3.0%, highlighting local supply-and-demand variations rather than broad-based market weakness.
Pricing
Average asking rent across all classes reached $3.85 per square foot per month on a full-service basis in Q3 2026, representing a 0.8% YOY increase. Class B properties recorded the strongest rent growth among property classes, increasing 1.5% YOY, while Class A rent rose 0.5%. South County led all submarkets in rent growth at 3.1% YOY, followed by Mid City at 2.2%. These trends suggest continued pricing resilience in select submarkets, where health care providers prioritize access to patient populations, referral networks and major health care campuses.
