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. Thank you to our sponsor Verizon Wireless.
EDC explains San Diego’s Q4 2023 economic data:
Key findings from Q4 2023:
- COMMERCIAL REAL ESTATE: Office and industrial real estate utilization fall for sixth straight quarter. In Q4, the region experienced sharp increases in negative net absorption of 441,867 sq. ft. in office space and 525,516 sq. ft. in industrial space. These declines mark the sixth consecutive quarter of negative net absorption. The office market ended 2023 with an additional 1.5 million sq. ft. of unoccupied space, bringing the total amount of vacant office space to more than 10.5 million sq. ft. In response, construction activity has generally declined in both office and industrial, most especially office where we see high interest rates and remote work trends continue post-pandemic.
- HOUSING PERMITS: In 2023, the number of housing construction permits reached its highest level since 2005. In Q4 alone, 3,500 housing construction permits were issued in San Diego, totaling 11,468 permits for 2023 and beating the average 8,635 permits granted annually since 2004. This was driven primarily by permits for five or more units, at almost 8,000 permits, while permits for one to four units decreased compared to 2022. Despite an increase in permitting activity, affordability remains woefully low. In fact, only one in nine households in San Diego can now afford the median home price, which reached $931,600 in Q4.
- VENTURE CAPITAL: More deals and more dollars in Q4. VC funding in Q4 was split almost equally between San Diego tech and life sciences companies, at $526 million and $570 million respectively, while the consumer companies raised $9 million. This brought the region’s total in Q4 to $1.1 billion, $134 million more than Q3. Making up more than half of Q4’s tech funding, Shield AI secured the region’s largest deal to buildout its AI pilot for autonomous aircraft systems. Overall, San Diego saw a total of $3.9 billion in funding across 182 deals in 2023, $1.9 million short from 2022, but ranking fifth in total VC funding among all U.S. metros.