San Diego Economy might have a 'Brighter Outlook'
Are we there yet?
Our desired economic destination is a nice place with low unemployment, an abundance of jobs, an agreeable tax structure, and a good lending climate.
However, like last year, 2011 may be more about travel, and less about finally arriving.
San Diego is still sorting things out after the Great Recession.
As 2011 begins, the worst of the recession appears to be over.
However, we’re not in the ideal climate for lending. Uncertainty about the future will temper businesses’ impulse to seek loans. Bankers, for their part, may not be disposed to lend — or to lend as freely as they might have several years ago. Lenders may also feel the need to continue consolidating, some say.
In real estate, conditions will generally favor tenants. As they did in 2010, big real estate investment trusts may dominate the buying of office buildings. Retail is a slightly different story. Rents may even rise on relatively scarce retail space. Much depends on consumer sentiment in 2011, as a rise in consumer spending will stimulate industrial real estate such as manufacturing, warehousing and distribution centers, says Don Ankeny, president and chief executive officer of San Diego-based Westcore Properties.
Uncle Sam has stimulated the construction sector by replacing aging buildings and putting new construction at military bases throughout the area and in nearby desert locations.
Consumers and Jobs
But back to the consumer, who has emerged as the giant in the U.S. economy. Stimulating consumer sentiment will require jobs, economists say.
While the recovery has not yet produced jobs en masse, it has created some jobs.
Consider, for example, the small, notable gain in jobs manufacturing the panels used to generate solar energy. Two-thirds of the domestic market for solar panels lies in the Golden State, says Tom Dyer, senior vice president for Kyocera Solar, a unit of Japan-based Kyocera Group. This, as well as other job gains, can be traced to stimulus legislation that mandates products be put together in the United States.
While many manufacturers have decided San Diego is too pricey for them, some stay. One reason is national security. This year will continue to see big-ticket items such as U.S. Navy cargo ships and drone aircraft put together in San Diego, as well as a variety of electronics for military, aviation and space.
Another place where employment is expanding, albeit modestly, is health care, notes Lynn Reaser, an economist with Point Loma Nazarene University.
Of course, the San Diego economy can rely on an old and reliable factor: the region’s status as a travel destination. People who watch the sector expect tourism to rebuild slowly, but it is indeed rebuilding. The San Diego Convention Center Corp. reports 72 conventions booked at the region’s waterfront convention venue in 2011, up from 63 in 2010.
With such a talented work force possessing deep technical knowledge, it’s a good bet San Diego will continue to keep its hand in complex engineered products.
Officials with Connect, an organization that helps nascent technology businesses, note the presence of local innovative industry “clusters” such as wireless communications, biofuels, genomics and energy storage. A nucleus of specialized talent is one building block for such clusters.
Technology has helped San Diego before. During the recession of the 1990s, when bad times threatened to stay, biotech and high-tech electronics rode to the rescue, says Marney Cox, chief economist with Sandag.
“Can you replicate the same miracle?” Cox asked, adding that the current recession is deeper than the recession of the 1990s.
So, are we there yet? San Diego may have to wait far later than next Jan. 3 to reach its preferred destination.
But it just might get there.
Healthy Amount of Funding
New technologies are growing, changing and coming into their own. San Diego still has biotechnology and wireless. It has robotics, cybersecurity and clean technology.
The latter encompasses energy, water, recycling, transportation, materials manufacturing and agriculture. In the last five years, San Diego has attracted $445 million in venture capital for clean technology alone, according to a report from The San Diego Foundation. The National Venture Capital Association estimates that each $100 million in venture capital funding helps create 2,700 jobs.
Connect reports San Diego received more than $900 million in grant funding from the National Institutes of Health and the National Science Foundation during the first three quarters of 2010.
Growing side by side, new disciplines are expected to cross-pollinate, creating hybrids such as wireless health care.
Wireless Care
Wireless monitoring may be the thing that helps the United States take care of its aging, baby boom generation, some observers say. Research is already under way. Wireless technology company Qualcomm Inc. is involved in an experiment in the northern part of Japan, monitoring the health of 300 elderly patients using wireless devices.
Qualcomm reported net income for fiscal year 2010 was $3.25 billion, up 104 percent from 2009. Revenues in 2011 could hit $13 billion, compared with $10.99 billion in 2010.
Health care is not only converging with wireless, says Rory Moore, CEO of CommNexus San Diego. Health care is converging with information technology and silicon chips.
Joe Panetta, CEO of Biocom, the regional life sciences association, says he’s watched the area’s life sciences industry grow for 35 years.
The wireless health care, medical device and software communities work well in partnership with the life sciences sector, says Panetta.
“I know we didn’t do this by design,” he said, speaking of the way San Diego’s industries have grown up. “It’s worked out very well for us.”
via sdbj.com
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