San Diego Wage Growth Is A Big Win for Office

San Diego is among the leading markets in the US for wage growth, thanks largely to its innovation and technology hubs, according to a recent report from JLL. The wage growth has been a big win for the office market, because the companies paying top salaries are also shelling out top rents on high-quality office product. The trend is all part of the ongoing war for talent, where companies are fighting to attract professionals.

“As wages grow and the war for talent continues, besides raising wages to recruit employees, we are seeing companies leasing high-quality office space to attract workers. Since 2014, the number of employees at high-tech companies has grown by 20%, being a driving force for expansion in the innovation sector,” Pat Ashton, senior marketing analyst at JLL. “Defense, software, and general tech combined represented 32 percent of the office leasing in year-to-date 2019, creating a positive outlook for the future of high-tech jobs in San Diego.”

The innovation sector is one of the biggest players in the fight for talent, and as a result, has been a major driver of office activity. “As the innovation sector continues to grow, one of its main focuses is on attracting and retaining top talent by providing engaging work environments,” says Ashton. “This trend has been most notable in defense/aerospace, life sciences, and technology companies, as evidenced by their increased appetite for newer class A office space, particularly in the UTC, Del Mar Heights, Rancho Bernardo, Scripps Ranch, and Sorrento Mesa submarkets.”

This trend is not going to change in 2020. Ashton expects the innovation industries to continue to be a driver of activity next year. “I see San Diego and other emerging tech markets such as Austin and Seattle leading the country for wage growth. Currently, we have seen the highest demand for tenants looking for space in the market in over three years,” he says. “Over 61% of these tenants are from the defense, life sciences, or tech industries. As these companies grow their presence, they will be hiring and recruiting highly skilled workers that will command hire wages for years to come.”