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How Important is the Tech Sector to San Diego?

Carrie Rossenfeld Office

Tech is a critical component of the San Diego local economy and CRE market, according to a statement from a representative of Cushman & Wakefield (C&W). The firm has released its Tech Cities 2.0 annual report, which the release says identifies existing and emerging tech centers increasingly driving the North American economy and details their impact on the commercial real estate sector.

According to the statement, this year’s research groups the top cities into three categories based on how important the tech sector is to the local economy and real estate market: “tech is a critical component,” “tech is a key driver,” and “tech is important.” Revathi Greenwood, C&W’s Americas head of research, is quoted in the statement as saying, “As tech companies continue to dominate headlines and grow, a key question is how this affects commercial real estate.”

In a new release from the rep that focuses on the San Diego market, Jolanta Campion, C&W’s director of research in San Diego, is quoted as saying, “With a complex military ecosystem, the University of California/San Diego (UCSD) and numerous research institutions, San Diego’s technology cluster has positioned the region as a hub for innovation in emerging sectors such as cybersecurity, aerospace, navigation and maritime, software, health IT, bioinformatics and cleantech.” She adds that the market “also sits very high when it comes to the best areas for startups, ranking fourth nationally in startup activity, or the number of new startup businesses, according to the most recent report (2017) from The Kauffman Index. This was a considerable advancement compared to the region’s ranking 11th in the 2016 index.”

Jolanta Campion, Cushman & Wakefield’s research director in San Diego | Courtesy a representative of Cushman & Wakefield

Campion adds that San Diego’s mild climate, outdoor lifestyle, and plentiful entertainment options draw both workers and residents. “Our region also touts a highly educated and tech-savvy workforce, which companies are able to draw from and that has helped to drive the tech growth occurring across our region.”

From an employment perspective, San Diego–based Dan Broderick, C&W’s regional managing principal for the Southwest and Mexico, is quoted in the statement as saying, “Currently tech-company employment accounts for more than 8 percent of San Diego’s total employment, ranking it ninth in the U.S. based on such percentage per the Bureau of Labor Statistics — though this figure is likely much higher if you consider all the other industries utilizing or relying heavily on technology nowadays.”

Broderick adds that between January 2017 and August 2018, tech tenants have leased nearly 3 million square feet of space across San Diego’s office and industrial sectors. “Even though the growth of tech companies has pushed the average rent 31 percent since 2010, we find rents are still more competitive compared to other major tech markets.”

Broderick also notes that the region’s tech economy is based in a strong life-science hub in the Torrey Pines submarket as well as a telecommunications hub around Qualcomm in the Sorrento Mesa submarket. “While Qualcomm recently reduced its local footprint, companies such as Illumina, ViaSat, and Nuvasive continue to expand their presence in the region.”