Southern California Life Sciences: San Diego Vacancy Surges, Orange County Stable

Title: Diverging Trends in Southern California’s Life Sciences Markets: San Diego vs. Orange County

Southern California’s life sciences sector is experiencing a peculiar divergence, reflected in contrasting trends in San Diego and Orange County markets. As of 2025, San Diego’s robust 26.9 million-square-foot lab space grapples with a steep 28.3 percent vacancy rate, pushing its position as one of the most oversupplied markets in the country. In contrast, Orange County’s 10.1 million-square-foot sector boasts a much healthier vacancy rate of just 6.9 percent. This article explores these disparities, examining the underlying causes and future implications for both markets.

At the heart of San Diego’s growing vacancy is an influx of new construction, which contributed to the completion of 4.6 million square feet of lab space over two years. This influx far outpaced the market’s absorption rate, which managed to bring in a mere 500,000 square feet in the same timeframe. Notably, a significant demand downturn in 2023, which was marked by a staggering 1.3 million square feet of negative net absorption, set the stage for this extensive oversupply. While 2025 showed some recovery with a positive absorption of approximately 200,000 square feet, it remains insufficient compared to the growing inventory.

In terms of leasing activity, San Diego saw notable deals, including Avidity Biosciences’ 80,000-square-foot lease at Callan Ridge and AutoGenomics’ 60,000-square-foot commitment at the Carlsbad Research Center. However, the overall leasing landscape has shifted as major developers reassess their strategies. In response to the oversupply, many have opted to sell previously acquired assets and refocus on Class A properties. Almost all new construction projects have been postponed, with the exception of a singular 427,000-square-foot development expected in 2026, which has already been preleased to Bristol Myers Squibb.

On the other side of the spectrum, Orange County’s life sciences market has remained notably stable, primarily due to its focus on medical device and diagnostics innovation. Major players like Edwards Lifesciences and Masimo anchor the sector, and the area generates over $46.6 billion in annual economic activity while supporting more than 162,000 jobs. With no new constructions underway and flat net absorption levels, the market’s fundamentals remain intact. In 2025, Tarsus Pharmaceuticals led the leasing activity with a significant 59,626-square-foot commitment at Irvine Company’s Spectrum Terrace.

Another significant factor that underscores the contrasting positions of San Diego and Orange County lies in their respective rental rates. San Diego’s average triple-net asking rent stood at $84 per square foot, while Orange County remained significantly lower at $24 per square foot. Despite these lower rates, Orange County carries fit-out costs around $500 per square foot, highlighting the specialized nature of lab spaces and the associated tenant improvement allowances of $75 per square foot.

On a national scale, the life sciences sector is transitioning through a corrective phase, with over 50 million square feet of new product delivered across major markets over the past five years. The aggregate vacancy rate has risen from 20.4 percent to 23.5 percent in 2025, although the construction pipeline has tightened, with only about 7 million square feet still underway. This contraction reflects a broader industry recalibration as key market players respond to changing conditions.

As of 2025, San Diego’s venture capital funding reached $2.6 billion, establishing it as the third-largest life sciences market in the nation by this measure, while NIH funding stood at $1 billion. The workforce in this sector comprises around 18,900 employees. These numbers indicate a dynamic landscape that could favorably shift in the coming years. If the current upward trend in public biotech company valuations continues—now approximately 26 percent below peak levels—a renewed wave of IPO and venture capital activity could catalyze growth across both Southern California markets.

In conclusion, the stark contrast between San Diego and Orange County’s life sciences markets presents a compelling narrative about resilience, opportunity, and adaptive strategies within a fluctuating landscape. As San Diego’s sector reassesses its position amidst oversupply, and Orange County capitalizes on stable demand, both regions are poised for unique challenges and opportunities as they navigate the complexities of the life sciences industry in 2026 and beyond. Stakeholders in both markets must remain vigilant and adaptable to position themselves for success in this evolving sector.