Sorrento Mesa Industrial Market Losing Steam
Sorrento Mesa, right in the thick of San Diego’s life science energy alongside UC San Diego, is the hub for biotech and research. Investors poured money into the market, upgrading older buildings into high-tech lab and warehouse spaces and industrial warehouse spaces for lease. Now, things have gotten a little interesting. Sorrento Mesa remains the heart of the action. Still, Companies have listed more Sorrento Mesa lab space on the market than tenants have leased — about 360,000 square feet was given back to the market in the past year. In early 2025, the vacancy rate climbed a staggering 8% to over 20% — a level not seen in a decade. And with even more new lab buildings on the way, that number’s likely to climb. So, while Sorrento Mesa’s core strength in life science remains solid. But the market could see even more available industrial space in the coming quarters.
More Options, Less Competition
It’s not just the new buildings either. Some companies with industrial space are subleasing parts of it. Beyond new construction, Companies subleasing their space in Sorrento Mesa have added to the supply. That’s come down a bit from its peak last year. Still, there’s a ton of sublease space — around 660,000 square feet — available in Sorrento Mesa. Newer companies might find those deals attractive, but they haven’t driven a surge in leasing yet.
That crazy demand for lab space we saw after the pandemic hit has cooled off quite a bit. Some big companies are still looking for industrial space in Sorrento Mesa. Even though companies signed some major leases last year, the market hasn’t seen a consistent rush of demand. Remember all that investment money that flowed in after the pandemic? That gave a lot of those new, pre-revenue biotech companies the cash to expand and do their research.
New Builds, More Choices
Now, though, there’s some worry in the market, especially with all the new projects in the pipeline. Tenants have yet to lease about 90% of the 650,000 square feet of new lab and warehouse space in Sorrento Mesa. Developers are building these spaces in office and flex buildings, as of early this year. And most of that is supposed to be ready this year. Some experts believe it may take until the end of the decade to lease all that industrial space.
There’s been some good news, though. Vividion signed a big, 10-year lease for over 125,000 square feet at the Alexandria Tech Center in the middle of last year. That was the biggest lease in Sorrento Mesa in over a year and a half, and it’s letting Vividion grow even bigger. By the end of last summer, tenants had occupied nearly all of the 250,000 square foot building.
Rents Cool Off, Tenants Benefit
When it comes to Sorrento Mesa for rents and lease rates, Lease rates rose just 2% last year, well below the previous five-year average of over 6% in the five years before that. Overall rents are up about 34% in the last five years. It’s a good time for tenants to negotiate perks. New lab leases still cost over $5.50 NNN per/sqft, but you might get more than a year of free rent on a 10-year deal. And tenant improvements? Expect to pay upwards of $200 per square foot for those build-outs.
Don’t expect rents to suddenly jump anytime soon. It’ll probably take a big influx of new venture capital to really change the demand story in the near future. Vacancy went up by a significant amount last year, and it’s likely to keep rising as all that new industrial warehouse space for lease in Sorrento Mesa hits the market this year.
