How Will San Diego Be Affected by Google's Presence?

Market Insights
August 22, 2016

Keith DeCoster

Keith DeCoster

Director of U.S. Real Estate Analytics

Considering the extent to which Google has extended its operations and search for talent across the U.S. in recent years, it is hard to believe the company has never had a presence in San Diego – until now. Google bought San Diego sensor technology start-up Lumedyne Technologies for a reported $85 million in 2015, making it the first local office for the Mountain View-based company. The tech giant then leased 60,000 square feet at the Verge complex in Sorrento Mesa, perhaps in part to house its new acquisition. Lumedyne occupies about 9,500 square feet and had began searching a larger office space last year per reports.

It remains to be seen exactly what plans Google has for its new San Diego outpost. Among Google Alphabet’s many moonshots is Verily, its biotech/medical device venture, which would benefit from tapping into the region’s biotech expertise. Or it may simply be finally appreciating the level of general talent in San Diego. A San Diego Regional EDC study showed San Diego has the second-highest concentration of science and engineering professionals in the US.

The pursuit of labor has brought many tech firms to San Diego in recent months. Beyond its talent, San Diego also offers living costs that are lower than in Northern California. Google, Apple and Facebook can certainly afford the cost of office space in Silicon Valley, but some of their current and prospective employees are priced out of the local housing markets. These heavyweights, and other tech companies, have been expanding operations to what are considered secondary markets. San Diego, Raleigh/Durham and Atlanta for example provide a high quality of life and housing that is priced well below what a renter or home buyer would be saddled with in Silicon Valley or San Francisco. As of May, the average single-family home in San Diego costs $539,000, well below the $831,700 average in San Jose and about half of San Francisco’s $1.1 million average.

Google’s move also has to the potential to put San Diego on the short list for experienced tech employees considering where they can have a long-term career. While San Diego is a destination for scientists and younger tech talent, it has had some difficulty attracting and retaining top software and network engineers who have traditionally found their way to Northern California, Austin, Boston or New York City. In today’s climate, employers in San Diego may have to pay a premium, though, to lure candidates with an established track record from the Valley or San Francisco. According to a 2015 report by Hired, offers from San Diego firms to software engineer candidates located in San Francisco were $19,000 higher than were offers to software engineers living within San Diego.

If Google sets down roots in San Diego and other tech firms follow suit, more experienced tech employees may overcome some of their hesitation.





Keith DeCoster

Keith DeCoster

Keith oversees the production of local and national market materials. Keith also collaborates with his colleagues across the U.S. and Europe, specializing in reports and insights that highlight the impact of economic trends and market fundamentals on tenants.