Through Q3 2025, the Southwest Region — spanning Phoenix, Denver, Las Vegas, and San Diego —continues to shift gears. After a decade marked by rapid absorption, development cycles, and population inflows, the region is now experiencing a measured recalibration. Industrial and retail remain comparatively steady, multifamily is navigating supply and rent pressures, and office keeps evolving as tenants refine their space strategies. Investor sentiment across the region is cautiously optimistic as many watch for signs of bottoming and repositioning opportunities.
Against this backdrop, San Diego stands out for its stability, disciplined supply pipeline, and long-term economic anchors, making it one of the more resilient metros in the Southwest.
San Diego’s commercial real estate landscape continues to be defined by disciplined development, high barriers to entry, and diverse demand drivers—including defense, biotech, tourism, and cross-border logistics. Across all property types, the market is demonstrating moderate softening, but remains fundamentally healthy.
Below is a sector-by-sector breakdown of Q3 2025 conditions and “what this means” for owners, investors, and brokers.
INDUSTRIAL — Still Tight, But Showing Hairline Cracks
San Diego’s industrial market remains one of the strongest in California, but 2025 has introduced selective softening—particularly in older product and in submarkets with big-box availability.
Key Themes
Investor & Owner Implications
What This Means for You:
RETAIL — More Availability, Stable Demand, and Select Big-Box Turnover
San Diego retail is in a transitional year. Availability has increased due to a wave of national retailer closures—including Macy’s, Joann, Kohls, Rite Aid, and Party City—pushing vacancy to its highest level since 2021. However, high-quality space continues to lease quickly.
Key Findings from Q3 Reports
What This Means for CRE Professionals
MULTIFAMILY — Supply Pressure Meets Affordability Limits
The San Diego multifamily market remains demand-heavy but is currently working through the same pressures seen nationally: elevated supply in certain pockets, flattening rents, and competition among Class A operators.
Q3 Multifamily Highlights
Implications
OFFICE — The Slow-Motion Reset Continues
San Diego’s office market continues its multiyear structural transition. Demand is uneven, with the strongest activity coming from professional services, medical office, and life science users.
Q3 Office Takeaways
What This Means for CRE
Across all sectors, San Diego continues to benefit from some of the strongest economic pillars in the country:
These deep, diversified anchors support a resilient CRE market even amid cyclical softening.
While Q3 reflects moderated demand across the board, San Diego’s extremely limited construction pipeline, land constraints, and high-cost entitlement environment continue to protect long-term values.
Investors: watching for repricing in retail and office
Owners: prioritize building quality and competitive pricing
Brokers: anticipate increased leasing activity in 2026 as space normalizes
San Diego remains a fundamentally strong market in the Southwest—one where stability, scarcity, and high barriers to entry continue to define long-term value.
Source: Costar
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Whether you’re buying, selling, leasing, or investing in San Diego commercial real estate, our expert advisors at SVN | Vanguard can help you navigate today’s market with clarity and confidence.
Southwest Region: 2024 Q2 Insights from SVN’s Regional Experts
If you’re wondering where the smart money is heading in commercial real estate, look no further than the Southwest Region. From the tech boom in San Diego to the resurgence of Las Vegas, and Denver’s growth spurt to the ever-evolving Los Angeles landscape, this region is buzzing with opportunity. But with so much happening, how do you separate the hype from the real deals?
That’s where our SVN Southwest Region team comes in. With boots on the ground in every key city—San Diego, Denver, Las Vegas, Los Angeles, Orange County, Inland Empire, Phoenix, Fort Collins, Albuquerque, Dallas Fort Worth, and Houston —we don’t just watch the market; we live it. Our local experts are quick in catching the latest trends, shifts, and opportunities before they hit the headlines. So, whether you’re an investor, developer, or just a real estate enthusiast, grab a cup of coffee (or maybe something stronger) and let’s dive into what’s happening right now in the Southwest Region commercial real estate market.
The Southwest Region: A Powerhouse of Diverse Real Estate Markets
Los Angeles and Orange County lead the way with their robust economies driven by tech, entertainment, and a resilient industrial sector. The tech and biotech industries continue to fuel growth in San Diego, while the Inland Empire keeps it position as a key logistics and distribution hub, powered by e-commerce. Meanwhile, Las Vegas is redefining itself beyond tourism and becoming a major player for innovation, logistics, and entertainment.
Heading east, we have Phoenix and Denver who are emerging as the top-tier choices for businesses and residents alike, thank to their competitive costs, lifestyle appeal, and growing job markets. Fort Collins, known for its high quality of life and emerging tech sector, complements the Denver market, while Albuquerque offer affordability and growth potential in market that is often overlooked.
Dallas-Fort Worth and Houston are both experiencing rapid growth, with DFW’s thriving corporate relocations and tech startups, while Houston has its diversified economy and its strong industrial / office demand.
As these cities continue to evolve, the Southwest Region presents an abundance of opportunities with each market offering a unique dynamic and potential for growth. It’s a region where staying ahead means staying informed , and any of our SVN® teams are here to provide you with the best advice and market information you need to navigate the commercial real estate world.
