San Diego’s Economic Snapshot: Q4 2021

Every quarter San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

EDC explains San Diego’s Q4 2021 economic data:

Key Findings from Q4 2021:

  1. VENTURE CAPITAL: Venture capital investments are making it rain cold, hard cash in sunny San Diego. The region’s companies closed out the year with another bonanza of VC funding in Q4, totaling more than $2.6 billion across Angel, Seed, Series A, and Growth stages–just shy of the $2.69 billion in Q1. Once again, Tech was the most funded industry, raking in north of $1.5 billion, compared to $0.6 billion in Life Sciences. Surprisingly, VC in Consumer companies reached $437 million, with apparel company Vuori pulling in $400 million alone, one of the largest investments in a private apparel brand in history. All in all, total VC funding for 2021 came in at $9 billion, compared to the $5.3 billion in 2020.
  2. COMMERCIAL REAL ESTATE: Life Sciences companies drive demand growth in commercial real estate. A record year in venture funding is beginning to manifest itself in the commercial real estate market, as current demand for lab space is 2.75 million square feet—more than triple the amount of new deliveries expected in the next year according to a market report by CBRE. Despite 4.8 million square feet of new deliveries in the industrial market, much of this was pre-leased, doing little to stop the steady decline in the vacancy rate which ended 2021 at 2.4 percent. On top of this, asking rates for low-finish industrial space were 8.8 percent higher at the end of Q4 compared to a year ago. Furthermore, increased demand for office space resulted in the third straight quarter of declining vacancy rates, with a positive net absorption of 340,000 square feet in Q4.
  3. HOUSING: Despite slightly lower home prices, San Diego’s affordability crisis deepens. The median home price in San Diego came in at $836,700 in December 2021, $13,300 lower than the end of Q3, as year-ago home sales fell 11.2 percent. However, home prices remain 14.6 percent higher than a year ago, worsening San Diego’s affordability crisis. Simply put, the growth in housing supply is not keeping up with demand, which could have lasting impacts on the region’s capacity to compete for the talent that drives San Diego’s innovation economy.

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