Daily Business Report — June 20, 2014
The Inside View from Jason Hughes
Class A Space in Short Supply
As Companies Flock
To Downtown San Diego
What happened to Downtown San Diego? Over the past six months, Downtown has undergone an incredibly swift evolution. Starting as the “cost-effective” alternative, rents are quickly rising, though still not on par with the soaring rates of the suburbs. Today, Downtown is unequivocally the “It” place to be for companies focused on talent recruitment, employee retention, and being part of a thriving, energetic community. As a result, companies setting up shop downtown have gobbled up nearly all the Class A office space on the market.
Rest assured, this movement is not just in the tech arena. Kleinfelder, an international architecture and engineering firm, moved its team from Governor Park into a 40,000+ square foot space on 550 West C Street several months ago. Berkshire Hathaway has its eyes set on downtown too, moving out of 20,000+ square feet in Mission Valley into 30,000 sf at 525 B Street. AECOM has moved its team from 1420 Kettner and Governor Park into a 40,000+ square foot space in 401 West A Street. Bumble Bee Foods moved its global headquarters from Kearny Mesa to the Showley Brothers’ Candy Factory for 30,000+ square feet on the outfield of Petco Park.
So what gives? Why the movement to and buzz about Downtown?
1) It’s still the most cost-effective alternative compared to other Class A and B space across he county.
2) Amenities, amenities, amenities. Downtown is the only true live-work-play environment in the county. It’s one of the most walkable large cities in the U.S. and has more restaurants than Sorrento Valley, UTC, and Del Mar Heights has combined!
3) It’s where the talent lives. Little Italy, San Diego, was just named the Millennial Capital of the U.S. and it is the most desirable place for young talent to live-work-play. When competing with the Googles and Twitters of the world, talent recruitment and retention is one of the most challenging aspects of running a successful company in San Diego. The best way to keep them happy is to make sure they love where they work.
The only issue with relocating to downtown? There is currently no new commercial construction underway. Downtown is one of the few markets to have zero commercial high-rises constructed in the last economic downturn. However, that’s not to say we won’t be seeing some of the city’s best high-rises pop up in the next 5 years
Jason Hughes is president and CEO of Hughes Marino, a San Diego commercial real estate company specializing in tenant representation and building purchases.
San Diego County Jobless Rate
Drops Again — 5.8 Percent
Nonfarm employment up 5,100 jobs over the month; up 29,300 jobs over the year
The unemployment rate in San Diego County was 5.8 percent in May, down from a revised 6.1 percent in April and below the year-ago estimate of 7.3 percent, the state Employment Development Department reported today. California’s jobless rate for the same period was 7.1 percent while the nation’s was 6.1 percent.
Between April and May:
Total nonfarm employment increased from 1,337,600 to 1,342,700, a gain of 5,100 jobs. Agricultural employment gained 100 jobs, or 1.0 percent.
• Leisure and hospitality recorded the greatest month-over gain, adding 3,900 jobs. Accommodation and food services (up 3,200) accounted for more than 80 percent of the job growth in this sector, primarily from food services and drinking places (up 2,800). Arts, entertainment, and recreation added 700 jobs.
• Five other nonfarm sectors also added jobs over the month. The most notable employment growth came from construction (up 1,000). Specialty trade contractors increased by 600 jobs, followed by gains in construction of buildings (up 300) and heavy and civil engineering construction (up 100).
• Four sectors posted month-over job losses: financial activities (down 700); professional and business services (down 200); trade, transportation, and utilities (down 100); and information (down 100).
Between May 2013 and May 2014:
Total nonfarm employment increased by 29,300 jobs, or 2.2 percent. Agricultural employment gained 400 jobs, or 4.0 percent.
• Leisure and hospitality reported the greatest year-over gain, adding 6,200 jobs. Accommodation and food services (up 4,500) contributed to more than 70 percent of the job growth in this sector. Job losses in accommodation (down 300) offset the employment growth in food services and drinking places (up 4,800). Arts, entertainment, and recreation added 1,700 jobs.
• Seven other industries also added jobs over the year. The most significant job gains came from construction (up 5,100); professional and business services (up 4,800); and educational and health services (up 4,700).
• Two sectors reported year-over job losses: financial activities (down 1,000) and information (down 200).
San Diego Biotechs in Spotlight
At BIO International Convention
More than 50 San Diego-based biotech companies and organizations will be exhibiting at the 2014 BIO International Convention Monday through Thursday at the San Diego Convention Center. The convention will welcome Sir Richard Branson, founder of the Virgin Group, as a luncheon keynote speaker on Tuesday, and former Secretary of State Hillary Rodham Clinton as keynote speaker on Wednesday.
Fifty-seven companies from the region, one of the top three biotech clusters in the country, are scheduled to introduce some 15,000 attendees to local achievements in research, drug development, venture funding, digital health, regenerative medicine, medical devices and other biotech innovations.
BIO 2014, the world’s largest biotech event, attracts the biggest names in biotech from around the world. Companies regularly introduce new technologies and discoveries. The event offers key networking and partnering opportunities and provides insights and inspiration on major trends affecting the industry. It features the convention’s first ever Digital Health Zone — a tribute to an industry with San Diego roots. The four-day event is estimated to generate $56.3 million in economic benefits to the San Diego region.
San Diego exhibitors include:
• EBD Group, Carlsbad, specializes in partnering programs for the global life science industry.
• Formex LLC San Diego, a contract development and manufacturing organization, specializes in bioavailability enhancement and controlled release technologies, such as hot melt extrusion .
• MD Revolution, La Jolla, developed the health management app RevUp! The app accounts for biometric measures, blood tests, cardiovascular abilities and other health benchmarks to create custom health plans for users.
• Image Ware Systems Inc., San Diego, brings together cloud and mobile technology to offer multi-factor authentication for smartphone users and mobile clients.
For a complete list of exhibitors, go to mybio.org.
Hillary Clinton will be at Warwick’s in La Jolla on June 25 to sign copies of her newest book, “Hard Choices,” and the former Secretary of State has scheduled a book tour to promote sales. Her Warwick’s visit will take place 8:30 a.m. There will be a limited amount of wristbands handed out around 6:30 a.m. on the day of the event – first come, first served.
Venture Capitalists Meet Local Startups at Annual Summit
The San Diego tech community celebrated the largest gathering of venture capitalists outside Silicon Valley on Thursday with displays by 30 “Cool Companies” and keynote speeches by industry leaders.
Mayor Kevin Faulconer opened the summit by praising the “ideas, ingenuity and persistence” of the companies, which were displaying products ranging from a head-up display for motorcycle helmets to portable solar chargers to online metrics for nonprofit institutions.
“You learn first and foremost in politics that you always want to be associated with cool,” Faulconer said, congratulating the cool companies.
The 12th annual Venture Summit by the San Diego Venture Group drew some 800 people to the San Diego Marriott Marquis and Marina.
Dave Titus, president of the venture group, outlined a number of trends benefiting startups in San Diego:
• Thirteen venture-backed life sciences companies went public in the last 18 months.
• There is a growing community of venture investors, already numbering over 100 firms and individuals.
• More money is available from more sources for startups.
• There has been an “explosion” in incubators helping new companies get started
“If you can’t find help for your company, you’re not looking very hard,” Titus said.
He noted that San Diego has world leading companies in sectors as diverse as wireless, craft beer, unmanned aircraft, biofuels and golfing equipment, among other areas.
Physicist and author Mark Mills told the group that more innovation is ahead. He said the information part of the economy— moving bits — is now three times the size of the transportation part — moving things.
“We are now in the third wave of computing,” he said, predicting that the impact will be “equal or greater than the Industrial Revolution itself.
“You are doing what is essential; what will change the world,” he told the summit.
– Times of San Diego
More than $7 Million in Tax Credits Come to
Companies in San Diego, Imperial Counties
Companies with locations in San Diego and Imperial Counties received more than $7 million in tax credits in the inaugural round of California Competes, the program that took the place of enterprise zones, which were eliminated by Gov. Jerry Brown.
The tax incentives are part of the Governor’s Office of Business and Economic Development’s (GO-BIZ) efforts to encourage job creation and economic development throughout the state. The credits were approved Thursday by the California Competes Tax Credit Committee.
“The California Competes tax credit encourages businesses, large and small, to expand in California and create good paying jobs in a variety of industries,” said GO-Biz Director Kish Rajan.
San Diego and Imperial County companies also received more than 65 percent — $4.83 million of the $7.37 million allocated for small businesses under the program. meaning that the region raked in more small business credits than any other area in the state combined.
In total, one Imperial County and four San Diego companies were approved for the economic incentives, which are collectively valued at $7.43 million. According to documents filed by the respective companies, the incentives are expected to create 1,144 jobs.
“The companies selected for California Competes are indicative of the diverse industries that make up San Diego’s economy,” said Mark Cafferty, president and CEO of San Diego Regional EDC. “We frequently hear that businesses choose San Diego because of its talented workforce and its dynamic innovation ecosystem. We believe that GO-BIZ’s California Competes program will give more companies a reason to grow and expand within our region.”
• Petco, San Diego. Jobs: 263. Tax Credit: $2.6 million.
• BST Nano Carbon, San Diego. Jobs: 632. Tax Credit: $1.45 million.
• Sparsha, Oceanside. Jobs: 21. Tax Credit: $250,000.
• American Marine Abatement Services, National City. Jobs: 6. Tax Credit: $30,000.
CE&P Imperial Valley, Brawley. Jobs: 222. Tax Credit: $3.1 million.
Total jobs: 1,144. Total Tax Credits: $7.43 million.
Police Chief Speaks to Employers Association
San Diego Police Chief Shelley Zimmerman will be the guest speaker at the San Diego Employers Association’s summer Strategic Leadership Series event July 9 at 11:30 a.m. at Crowne Plaza Mission Valley. Zimmerman was promoted to chief of police earlier this year. She is a 31-year veteran of the San Diego Police Department.
The registration fee is $49 for SDEA members and $59 for nonmembers. Lunch and networking are included.
To learn more, visit www.sdea.com
UC San Diego Health System Designated
U.S. Olympic Regional Medical Center
UC San Diego Health System has been designated an Official U.S. Olympic Regional Medical Center, joining a national network of medical providers selected by the United States Olympic Committee to provide comprehensive medical services to Team USA athletes, including orthopedics and sports medicine, primary care, cardiovascular care, neurosurgery, cancer care and physical therapy.
As a U.S. Olympic Regional Medical Center, UC San Diego experts will provide comprehensive care services across specialties for athletes in a variety of sports such as track & field, cycling, skiing, rowing and volleyball.
San Diegan’s Electric Giraffe Introduced
At the White House Maker Faire
Linddsay Lawlor of San Diego introduced Russell, a 17-foot electric giraffe, to President Obama during the White House’s first ever Maker Faire on Wednesday. More than 100 “makers” from 25 states met with Obama to share their unique products. Russell created the 17-foot-tall, 2,200-pound robotic giraffe that can walk on wheels and is powered by a 12-horsepower hybrid fuel-engine motor. The Maker Faire event is designed to highlight new tools and techniques that promote businesses and help presenting inventors bring their product to markets.
Besides the electric giraffe, other products included a 128-square-foot, portable “tiny house”; a 3D pancake printer; a giant red weather balloon; and more than 30 other inspiring and creative inventions brought to 1600 Pennsylvania Avenue by more than 100 students, entrepreneurs, engineers, and researchers from 25 states — all of whom love to “Make” stuff.
The day was a celebration of all things built-by-hand and designed-by-ingenuity — highlighting the role of cutting-edge equipment like 3D printers, laser-cutters, easy-to-use design software, and desktop machine tools in empowering everyday Americans to create and achieve almost anything.