Three reasons tech firms are flocking to San Diego

It's all about location, location, location.

Technology remains the leading industry for real estate expansion in the United States. In fact, tech firms are consistently driving the most leasing activity across the country, signing nearly 25% of all leases over 20,000 square feet in the past two years.

Consequently, the industry has quickly become an engine of economic growth in cities like San Diego. Landlords regard technology companies as coveted tenants. And like many other cities, San Diego believes that the greater the exposure to the tech industry, the greater the success of the local economy.

Established tech companies and growing startups alike are flocking to San Diego to reap these three benefits:

Tech firm success hinges upon the ability to hire and retain the best minds in the business, so skill and education levels of the local population are key drivers of location choice.

Sunny San Diego has an advantage here, boasting a higher concentration of residents employed in computer and math occupations than in nearby LA and Orange County.

Additionally, tech talent is more affordable than other top markets on the West Coast. San Diego tech employees make nearly $109,000 annually, on average, affording a high quality of life at a lower cost.

For a growing tech firm with unpredictable cash flows, the cost of rent can be a major pain point. For this reason, many firms seek out lower rent space in more affordable areas—particularly rapidly growing startups that need room for expansion. Companies specializing in e-commerce and social media are particularly sensitive to rent as profit margins are thin and time is needed to build up a user-base.

San Diego has the lowest average asking office rents among key California office markets. The benefit for tech firms? They get direct access to a highly talented and educated labor pool while saving on real estate costs.

Businesses can’t grow without customers. Many tech firms choose to locate themselves in or near markets with large populations such Los Angeles and New York. In particular, locations with a larger market size are important to tech firms in the sharing economy. As companies get priced out of more expensive markets, they can turn to San Diego and its growing economy and high quality of life.