ECONOMIC SNAPSHOT
A Summary of the San Diego Regional Economy
JANUARY 2016
UNEMPLOYMENT
Brought to you by
San Diego Regional EDC analyzes key
economic metrics that are important to
understanding the regional economy and
San Diego’s standing relative to other
major metropolitan areas in the U.S.
This issue covers data from the July
2015 to October 2015 quarter.
Highlights
San Diego County’s October 2015
unemployment rate recorded the 6th
largest drop among major metros.
————————————————
San Diego had the 8th highest
employment growth rate from October
2014 to October 2015.
————————————————
The region added 40,300 jobs since
last October, with 36,800 of those jobs
coming from the private sector.
————————————————
San Diego had the second highest
growth rate in degree holders among
peers from 2010 to 2014.
————————————————
Residential rental rates in San Diego
grew at a modest 5.4 percent from the
previous year, the 8th highest among
peer metros.
————————————————
The region recorded more than $1 billion
of total office sales in Q3 2015­—the
highest volume since Q3 2007.
————————————————
In Q3 2015, San Diego received the most
VC dollars since Q1 2008—more than
$435 million from 33 deals.
San Diego metro ranked 15th in unemployment rate in October 2015, down five spots from last
quarter (July 2015). San Diego’s 5.0 percent rate is just above the U.S. rate of 4.8 percent. The
year-over-year decline in unemployment remained a positive trend in the region. The rate fell by 1.0
percentage points, the 6th most among major metros.
San Diego has continued to fare better than the state and other California metros in terms of the
unemployment rate. Riverside and Los Angeles remain two of the three highest unemployment rates
among major metros, and the region was well below the state average of 5.7 percent.
Unemployment Rate: 25 Most Populous U.S. Metros
RANK
METRO
1
2
3
4
4
6
7
8
9
9
9
12
12
14
15
15
17
18
18
20
21
21
23
24
24
Minneapolis
Denver
San Antonio
San Francisco
Dallas
Boston
Washington DC
Seattle
Saint Louis
New York
Pittsburgh
Tampa
Houston
US
Philadelphia
San Diego
Portland
Chicago
Charlotte
Phoenix
Miami
Atlanta
Baltimore
Los Angeles
Riverside
Detroit
OCT-15
OCT-14 PP CHANGE
2.9
3.1
3.8
4.0
4.0
4.1
4.3
4.5
4.6
4.6
4.6
4.8
4.8
4.8
4.9
5.0
5.0
5.1
5.2
5.2
5.3
5.4
5.4
5.5
6.3
6.3
3.0
3.9
4.2
4.9
4.5
4.6
4.7
5.0
5.2
5.9
4.6
5.7
4.4
5.5
5.5
6.0
6.0
6.0
5.5
5.8
5.8
6.5
5.7
7.3
7.7
7.9
-0.1
-0.8
-0.4
-0.9
-0.5
-0.5
-0.4
-0.5
-0.6
-1.3
0.0
-0.9
0.4
-0.7
-0.6
-1.0
-1.0
-0.9
-0.3
-0.6
-0.5
-1.1
-0.3
-1.8
-1.4
-1.6
San Diego’s
unemployment
rate dropped
1.0 percentage
point, 6th
largest drop
among major
metros.
Source:
Bureau of Labor Statistics
Seasonally Unadjusted
PP = Percentage Point
Unemployment Rate: California Comparison
14.0
13.0
12.0
Riverside
11.0
California
10.0
Los Angeles
9.0
8.0
San Diego
7.0
US
6.0
San Francisco
5.0
4.0
3.0
Oct-10
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Source:
Bureau of Labor Statistics
San Diego Regional EDC ECONOMIC SNAPSHOT
JANUARY 2016
EMPLOYMENT
PAGE 2
San Diego experienced a small seasonal increase in employment in the July to
October quarter. The region’s 1.08 percent growth was 14th among major metros.
Despite the comparative under-performance over Q3, most sectors of the private
economy experienced quarterly growth, while government added 11,600 jobs
due to seasonal employment trends in public and private education. The leisure
and hospitality sector experienced some quarterly decline, likely due to hotels,
restaurants and entertainment venues winding down from the summer season.
Annual growth shows that the region’s economy continued to have a positive 2015.
San Diego recorded the 8th highest growth rate from October 2014 to October
2015. The region’s employment grew by 2.95 percent, compared with the U.S.
average growth rate of only 1.96 percent.
While San Diego’s overall growth is very positive, we continued to see explosive
growth in one of the region’s most important sectors. Professional, scientific
and technical services (PST) is a sector of the economy very heavily associated
with the region’s innovation clusters. Many of the companies and much of the
employment in clusters like biotechnology, biomedical products, cleantech and
information technology fall within the PST sector. Employment in the region’s PST
sector grew by 7.3 percent since last October.
Other key industries in the region experienced above average year-over-year
growth. The construction sector continued to boom, adding 3,300 jobs or 5.0
percent growth. Real estate also showed some positive signs. The industry grew
by 5.3 percent, adding 1,500 jobs. Leisure and hospitality, the industry most closely
associated with tourism, added 5,100 jobs over the year and grew by 2.9 percent.
Total Employment Growth: 25 Most Populous U.S. Metros
RANK
METRO
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
San Antonio
Portland
Atlanta
San Francisco
Charlotte
Riverside
Dallas
San Diego
Seattle
Tampa
Phoenix
Baltimore
Washington DC
Miami
Denver
Los Angeles
US
Detroit
Boston
Minneapolis
New York
Pittsburgh
Houston
Philadelphia
Chicago
Saint Louis
% CHANGE YEAR
OCT ‘14 - OCT ‘15
% CHANGE QTR
OCT ‘15 - OCT ‘15
3.94%
3.54%
3.45%
3.40%
3.34%
3.29%
3.10%
2.95%
2.94%
2.81%
2.69%
2.46%
2.26%
2.24%
2.23%
2.15%
1.96%
1.96%
1.91%
1.88%
1.70%
1.32%
1.15%
1.11%
1.10%
0.81%
1.50%
1.50%
1.55%
1.65%
3.29%
2.35%
1.19%
1.08%
0.08%
2.05%
3.97%
0.62%
0.61%
2.45%
0.11%
1.77%
1.33%
0.95%
0.58%
0.45%
0.75%
-0.01%
0.65%
1.45%
0.39%
1.40%
Source: Bureau of Labor Statistics | Ranked by % Change Year
Employment by Industry (in thousands)
INDUSTRY
Total (Private and Government)
Total Private
Professional and Business Services*
Prof., Scientific, & Tech. Services*
Mgmt. of Companies & Enterprises
Administrative
Trade, Transportation, and Utilities
Wholesale Trade
Retail Trade
Transportation and Utilities
Education and Health Services
Education Services
Health Care and Social Assistance
Leisure and Hospitality*
Manufacturing*
Financial Activities
Finance and Insurance
Real Estate and Rental and Leasing
Construction
Other Services
Information*
Mining and Logging
Government
Federal Government
State Government
Local Government
OCT-15
JUL-15
OCT-14
CHANGE
PREV. QTR
CHANGE
PREV. YR
1404.7
1166.5
243.8
140.1
21.9
81.8
221.5
46.0
148.6
26.9
199.8
32.0
167.8
182.6
98.6
73.2
43.6
29.6
69.4
52.1
25.1
0.4
238.2
45.8
47.2
145.2
1389.7
1163.1
242.2
139.2
21.8
81.2
218.4
45.7
145.9
26.8
191.3
29.2
162.1
191.4
99
73.3
43.8
29.5
69
52.7
25.4
0.4
226.6
45.8
43.4
137.4
1364.4
1129.7
233.2
130.6
21.2
81.4
216.3
44.1
145.5
26.7
190.4
31.5
158.9
177.5
97
71
42.9
28.1
66.1
53.1
24.6
0.5
234.7
45.7
45.5
143.5
15.0
3.4
1.6
0.9
0.1
0.6
3.1
0.3
2.7
0.1
8.5
2.8
5.7
-8.8
-0.4
-0.1
-0.2
0.1
0.4
-0.6
-0.3
0.0
11.6
0.0
3.8
7.8
40.3
36.8
10.6
9.5
0.7
0.4
5.2
1.9
3.1
0.2
9.4
0.5
8.9
5.1
1.6
2.2
0.7
1.5
3.3
-1.0
0.5
-0.1
3.5
0.1
1.7
1.7
Source: California Employment Development Department | Italics = Supersector | Ordered by largest Supersectors
*Denotes industry sectors strongly associated with San Diego’s Traded Economies
%CHANGE %CHANGE
PREV. QTR PREV. YR
1.1%
0.3%
0.7%
0.6%
0.5%
0.7%
1.4%
0.7%
1.9%
0.4%
4.4%
9.6%
3.5%
-4.6%
-0.4%
-0.1%
-0.5%
0.3%
0.6%
-1.1%
-1.2%
0.0%
5.1%
0.0%
8.8%
5.7%
3.0%
3.3%
4.5%
7.3%
3.3%
0.5%
2.4%
4.3%
2.1%
0.7%
4.9%
1.6%
5.6%
2.9%
1.6%
3.1%
1.6%
5.3%
5.0%
-1.9%
2.0%
-20.0%
1.5%
0.2%
3.7%
1.2%
PST services
recorded the
highest annual
growth rate at 7.3
percent.
San Diego Regional EDC ECONOMIC SNAPSHOT
JANUARY 2016
PAGE 3
SPOTLIGHT ON TRENDS IN TALENT
Talent is the cornerstone of today’s global economy. It drives corporate location decisions,
encourages innovative urban planning and inspires entrepreneurship. In essence, talent
is the key to economic growth. If regions – such as San Diego – want to get ahead, they
must have the workforce to compete.
In January, San Diego Regional EDC released “Talent: Where San Diego Stands,” a
comprehensive study that contextualizes San Diego’s standing in talent growth and
retention with regard to highly-skilled engineering, science and tech talent in nine peer
metros including Austin, Denver and San Francisco. By analyzing key factors for firms and
site selectors and comparing key characteristics that attract talent, San Diego can better
understand how to maintain its competitive edge.
Among peer metros, San Diego ranks…
•
•
•
•
•
2nd – percent growth of degree-holding millennials (age 25-34)
1st – concentration of scientific R&D firms and employment
3rd– wages in sciences and engineering jobs
1st – lowest average commute times
2nd – average annual pay for R&D employees at $176,000
Some additional highlights from the study are below. To view the full report, including additional charts, best practices,
action items, and sources, visit: sandiegobusiness.org/research
San Diego Regional EDC ECONOMIC SNAPSHOT
JANUARY 2016
PAGE 4
RESIDENTIAL REAL ESTATE
HOME PRICES
RENTAL RATES
San Diego remained the second most expensive for-sale home market in the
U.S., according to National Association of Realtors. Home prices increased
by about 1.2 percent in the San Diego region from the previous quarter and
about 7.1 percent from the previous year. The quarterly growth rate was the
6th highest recorded among major metros, while the annual growth rate was
11th.
San Diego recorded the 4th highest residential rental rates, according to the
Zillow Rent Index. Rates went mostly unchanged from July to October in 2015.
However, rates were up 5.4 percent in October compared to the previous year,
which was the 8th highest annual rate of growth among peer major metro
areas.
Median Home Price: 25 Most Populous U.S. Metros
RANK
METRO
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
San Francisco
San Diego
Los Angeles
Boston
New York
Washington DC
Seattle
Denver
Portland
Riverside
Miami
Baltimore
Philadelphia
Chicago
US
Minneapolis
Phoenix
Houston
Dallas
Charlotte
San Antonio
Atlanta
Tampa
Saint Louis
Zillow Rent Index: 25 Most Populous U.S. Metros
PRICE % CHANGE FROM % CHANGE FROM
2015 Q3 PREV. QUARTER
PREV. YEAR
$809,400
$554,400
$506,800
$420,800
$410,500
$388,600
$386,300
$353,000
$319,300
$292,500
$290,000
$252,300
$234,700
$229,300
$229,000
$228,700
$218,800
$217,200
$210,000
$203,100
$199,300
$178,900
$175,000
$160,000
-1.4%
1.2%
13.8%
1.5%
0.0%
-3.8%
0.3%
-2.7%
1.4%
0.3%
0.0%
-0.9%
1.3%
-0.5%
-0.2%
-0.2%
0.4%
-1.8%
-2.4%
-3.9%
-0.1%
-1.4%
0.0%
1.8%
10.7%
7.1%
5.2%
5.2%
-0.4%
-0.1%
7.3%
11.9%
9.6%
6.2%
7.4%
-1.4%
1.5%
3.4%
5.5%
4.4%
9.1%
7.3%
8.5%
9.8%
6.9%
6.8%
20.7%
6.5%
Source: National Association of Realtors
Note: Pittsburgh and Detroit not available
RANK
METRO
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
San Francisco
Los Angeles
New York
San Diego
Boston
Washington
Denver
Seattle
Miami
Baltimore
Riverside
Portland
Chicago
Houston
Philadelphia
Dallas
Minneapolis
US
San Antonio
Tampa
Atlanta
Phoenix
Charlotte
Detroit
St. Louis
Pittsburgh
INDEX % CHANGE FROM % CHANGE FROM
OCT-15 PREV. QUARTER
PREV. YEAR
$3,304
$2,484
$2,356
$2,314
$2,240
$2,112
$1,945
$1,914
$1,813
$1,718
$1,686
$1,675
$1,641
$1,574
$1,559
$1,493
$1,504
$1,381
$1,308
$1,293
$1,275
$1,249
$1,220
$1,130
$1,121
$1,096
3.0%
0.4%
1.1%
0.0%
1.3%
0.2%
1.5%
2.1%
0.7%
0.0%
0.8%
2.1%
0.1%
1.1%
0.4%
0.6%
0.4%
0.2%
0.6%
0.7%
1.0%
0.7%
0.8%
-1.1%
0.4%
0.6%
15.2%
5.8%
5.3%
5.4%
7.4%
1.7%
11.1%
7.4%
4.1%
2.1%
4.1%
11.2%
1.4%
6.4%
2.1%
5.3%
2.2%
4.5%
5.4%
5.1%
5.0%
4.5%
5.2%
2.3%
2.7%
2.4%
Source: Zillow
ZRI Methodology: http://www.zillow.com/research/zillow-rent-index-methodology-2393/
BUILDING PERMITS
The region’s office market remained at the lowest region-wide vacancy rate in seven years
at 15.9 percent in Q2 2015. According to DTZ’s (now Cushman & Wakefield) Office Market
Snapshot, the low vacancy rate was driven primarily by leasing activity in the South County
sub-region. North and Central County sub-regions experienced slight up-ticks in the vacancy
rate, but overall, the San Diego region’s office market remained steady.
Residential rental rates grew at a modest
5.4 percent from the previous year, the 8th
highest among peer metros.
Residential Building Permits: San Diego County
BUILDING SIZE
Total
Single Family
2-4 Family
Multi-family (5+)
TOTAL NUMBER OF BUILDINGS
OCT-15 CHANGE QTR
CHANGE YR
173
19
18
210
-126
2
9
-115
22
14
13
49
TOTAL NUMBER OF UNITS
OCT-15
CHANGE QTR
CHANGE YR
173
58
631
862
-126
8
474
356
Source: US Census Bureau Building Permits Survey
Note: Monthly New Privately-Owned Residential Building Permits. Imputed figures used. Construction figures rounded to nearest 00.
22
42
511
575
TOTAL CONSTRUCTION COST
OCT-15
CHANGE QTR
CHANGE YR
$66,659,100
$12,733,600
$85,034,000
$164,426,700
-$33,815,000
$4,789,400
$52,224,100
$23,198,400
$20,295,900
$10,175,300
$61,207,900
$91,679,100
San Diego Regional EDC ECONOMIC SNAPSHOT
JANUARY 2016
PAGE 5
COMMERCIAL REAL ESTATE | PROVIDED BY
OFFICE
San Diego Historical Office Stats - Vacancy & Asking Rate
20%
San Diego’s office market continued to show many positive
signs in Q3 2015. One of the more impressive trends during
the quarter was the $1 billion-plus in total Office sales;
the highest volume of sales since Q3 2007. The Q3 2015
year-to-date sales volume exceeded $2.3 billion and already
surpassed the 2014 total by nearly $300 million. Alexandria’s
purchase of Qualcomm’s building at 10290 Campus Point
in UTC for $105 million was the quarter’s largest singlebuilding purchase.
18%
Although the total square footage under construction for
office properties decreased in Q3 2015, the market still
experienced the largest amount of square footage delivered
since 2007. In Q3 2015, the office market saw three
deliveries: the 320,000-sq.-ft. Sempra Energy headquarters
in Downtown, the 306,000-sq.-ft. One La Jolla Center in UTC,
and ViaSat’s 77,400-sq.-ft. build-to-suit building in Carlsbad.
The market was also witness to three new projects breaking
ground. The new construction of Class A buildings consists
of an additional 65,700-sq.-ft. build-to-suit for ViaSat in
Carlsbad and a new 92,018-sq.-ft project in Del Mar Heights
named Torrey Point. Torrey Point is comprised of two Class A
buildings with Pacific Ocean and Torrey Reserve views.
4%
The industrial real estate market remained
hot, with vacancy rates reaching record
lows in Q3 2015.
$3.50
Forecast
$3.00
16%
$2.50
14%
12%
$2.00
10%
$1.50
8%
6%
$1.00
$0.50
2%
0%
Source: CBRE Research; Forecast by CBRE Econometric Advisors
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4F 1F 2F 3F 4F 1F 2F 3F 4F
2008
2009
2010
2011
2012
2013
Vacancy
2014
2015
2016
2017
Asking Rate
San Diego Historical Industrial Stats - Vacancy & Asking Rate
12%
$2.00
Forecast
$1.80
10%
$1.60
$1.40
8%
$1.20
6%
$1.00
$0.80
4%
INDUSTRIAL
The surge of positivity surrounding the San Diego industrial
market did not give way in Q3 2015, as it posted the highest
positive net absorption since Q3 2006. Vacancy dropped for
the thirteenth consecutive quarter to a more than 10-year
record low of 4.4 percent. Net absorption has kept up its
pace every quarter in 2015; with Q3 2015’s impressive
1,254,926 sq. ft. of positive net absorption, year-to-date
net absorption has been brought to 3,235,297 sq. ft. Every
San Diego region posted positive net absorption in Q3 2015.
Central San Diego led Q3 2015 with 581,045 sq. ft., but North
County led year-to-date figures with over 1.2 million sq. ft.
Due to the recent surge in demand for the development of
new Industrial buildings, construction activity increased
significantly during the third quarter of 2015. In Q3 2015,
Techbilt Companies delivered two speculative warehouses in
Poway Corporate Center totaling 70,560 sq. ft. Both of these
buildings were delivered 100 percent pre-leased by Best Buy
and Grace Digital. These positive indicators have fueled more
industrial construction; in Q3 2015 Siempre Viva Business
Park broke ground on Building 18, a speculative 121,970-sq.ft. Warehouse in Otay Mesa. Additionally, ground was broken
on two new build-to-suits in Oceanside; Coca-Cola broke
ground on a new distribution Warehouse totaling 193,800
sq. ft. and Magnaflow broke ground on a 91,974-sq.-ft. light
industrial building.
$0.00
$0.60
$0.40
2%
$0.20
Source: CBRE Research; Forecast by CBRE Econometric Advisors
0%
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4F 1F 2F 3F 4F 1F 2F 3F 4F
2008
2009
2010
2011
2012
2013
Vacancy
2014
2015
2016
$0.00
2017
Asking Rate
San Diego Historical Stats - Under Construction
1,800,000
1,600,000
Source: CBRE Research
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
2008
2009
2010
2011
2012
Industrial
Office
2013
2014
2015
San Diego Regional EDC ECONOMIC SNAPSHOT
JANUARY 2016
PAGE 6
VENTURE CAPITAL
San Diego Venture Capital Funding by Industry (Q3 2014 - Q3 2015)
In Q3 2015, the San Diego region ranked 8th out of the 18 U.S.
regions tracked by the PricewaterhouseCoopers MoneyTree
Report in terms of VC dollars received by regional companies.
Total VC dollars was up substantially relative to national trends
and the region’s performance over the past several quarters. San
Diego received the most VC dollars since Q1 2008, with more
than $435 million from 33 deals.
Data from Q3 puts San Diego clearly on pace to reach $1 billion
in 2015. The region has received more than $832 million in
funding through three quarters, more than half of which came
from Q3. When you take the previous four quarter total, the
region has received nearly $1 billion.
In Q3 2015, San Diego received the most
VC dollars since Q1 2008—more than
$435 million from 33 deals.
Q3 reached reached this seven-year high on 33 deals accross
three big sectors. Biotech firms recorded 12 deals in the quarter,
which resulted in more than $196 million in investment or just
under half of the total investment received in the region. Another
38 percent of investment came on two large consumer products
and services deals that resulted in roughly $164 million in new
investment.
Software continued to trend positively, after recording the
largest quarter since 2007 in Q1 2015. In the previous four
quarters, the software industry has attracted more than a
quarter million dollars of investment. La Jolla-based firm Global
Analytics accounted for $10 million of the $40.7 million received
in Q3.
Q3 2015
Q3 2014
Prev. 4Q Total
Biotechnology
Consumer Products and Services
Electronics/Instrumentation
Financial Services
Healthcare Services
Industrial/Energy
IT Services
Media and Entertainment
Medical Devices and Equipment
Semiconductors
Software
Other
$196,424,700
$164,400,000
$0
$10,000,000
$0
$0
$0
$4,093,000
$1,768,000
$0
$40,782,900
$18,500,000
$145,433,200
$7,500,000
$2,000,000
$0
$0
$800,000
$4,096,000
$900,000
$23,437,000
$9,999,900
$26,135,000
$0
$458,052,400
$185,522,000
$4,720,000
$18,300,000
$3,956,000
$5,276,000
$2,200,200
$14,909,800
$12,482,000
$4,286,100
$227,936,900
$18,500,000
Total
$435,968,600 $220,301,100 $956,141,400
INDUSTRY
Source: PricewaterhouseCoopers MoneyTree Report
Note: Only industries with funding in San Diego shown
Prev. 4Q Total reflects total from Q4 2014 - Q3 2015
San Diego Venture Capital Funding by Stage (Q3 2014 - Q3 2015)
STAGE
Seed
Early Stage
Expansion
Later Stage
Total
Q3 2015
Q3 2014
Prev. 4Q Total
$52,630,000
$63,483,800
$199,940,100
$119,914,700
$3,910,000
$88,401,900
$44,231,100
$83,758,000
$110,837,000
$212,833,900
$294,192,100
$334,683,400
$435,968,600 $435,968,600 $956,141,400
Source: PricewaterhouseCoopers MoneyTree Report
Note: Only stages with funding in San Diego shown
After relatively slow years in 2013 and 2014, the region appears
poised to close out 2015 in near record fashion—a very positive
sign for the region’s tech and life science sectors. While biotech
is still the main driver of investment, other industries are
making up a larger share of investment than in recent history,
with a renewed interest in seed stage companies in 2015.
Prev. 4Q Total reflects total from Q4 2014 - Q3 2015
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