San Diego Economy? Strong? Weak?

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Submitted by gandalf on July 26, 2008 - 12:21pm

If the assessment of what happens to San Diego housing is ultimately a regional economic issue, what are you views on how San Diego's economy fares through the next few years? What are our strenghts and weaknesses as a regional economy? How will this economic cycle play out?

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(Disclaimer, I'm not a
Submitted by gandalf on July 26, 2008 - 12:22pm.

(Disclaimer, I'm not a professional economist, or an expert on the latest regional stats, but I'll take a chance and throw some observations out there to start:)

Regional Strengths:

+ Military presence to increase? Defense contracting to remain high, big business here in SD, SAIC, GenAtm, etc..

+ Healthcare likely to see continued growth? Demographics, Fed/State revenue streams, insurance money, etc. BioTech venture cap?

+ Strong higher education institutions. Universities are regional economic growth engines, education, research, spin-offs, etc. (eg. Qualcomm effect)

Regional Weaknesses:

- Construction, real estate and mortgage finance getting hammered. Job statistics understate impact due to P/T, self-employed, etc.

- Tourism taking a hit? Business travel, conventions, households tightening their belts, price of gas from Arizona, airfare, etc.

- High-tech to slump because it's a 'leading' industry, businesses spend on IT when they're doing well, avoid IT during recessionary environments. Thoughts?

- Will city be able to avoid bankruptcy? Liabilities are insane and tax revenues are going down. Municipal and related industries to take a hit?

- Trade with Mexico, tourism, etc. dropping due to border issues? Reading about the impacts on Tijuana recently. Feedback here?

How does this economic cycle play out in the San Diego region?

G: I think San Diego will
Submitted by Aecetia on July 26, 2008 - 12:36pm.

G:

I think San Diego will stay strong and competitive even in a recession because of its location and weather. If there is a depression, all bets are off. Also, if cities continue to increase their sales tax to off set their declining revenues, then they will see people migrate to other cities were the sales tax is lower. El Cajon is a good example of this and the numbers are way down in Parkway Plaza mall because of the tax increase. If the cities try to balance the deficit on the backs of the tourists with TOT, then that will eventually catch up to them, too. Citizens are not stupid. Politicians think they can always raise business taxes, sales taxes, etc. and disguise them as fees and no one will be the wiser. That is their biggest problem. People will leave the State in droves to other States that are more business and retiree friendly. That will leave California much poorer, economically and socially. It is time they learned that you cannot tax your way into prosperity. It did not work for Rome and it will not work for the State.

Commercial vacancies point to
Submitted by j on July 26, 2008 - 8:31pm.

Commercial vacancies point to weak. If 20% of commercial buildings are vacant I say weak. 18% plus is the same thing.

Not a bloodbath. Reeling
Submitted by equalizer on July 27, 2008 - 12:00am.

Not a bloodbath. Reeling retailers cut stores. Starbucks, Meryns, etc are closing stores.

Mike Moser, senior vice president of CB Richard Ellis, said San Diego's retail real estate market is “still pretty healthy.” Vacancy rates have risen from an average of 1 percent to 1.5 percent last year to about 2.5 percentto 3 percent this year, he estimated.

“A neighborhood shopping center that was full a year ago may have one or two vacant spaces in it now, but that is coming off a market that had almost no vacancies,” Moser said. “It's not like there is a bloodbath out there.

http://www.signonsandiego.com/news/busin...

CA already has highest
Submitted by equalizer on July 27, 2008 - 12:10am.

CA already has highest regulations, highest taxes, highest energy costs, nearly highest labor costs. Compare Small retailer like pizza shop or UPS store in CA to other states and the profit margin is half. Why is anyone still here??

Why is anyone still
Submitted by toots on July 27, 2008 - 9:08am.

Why is anyone still here??

The weather...........

Local office vacancies are
Submitted by j on July 27, 2008 - 4:55pm.

Local office vacancies are already high: http://www.signonsandiego.com/uniontrib/...

I meant small business
Submitted by equalizer on July 27, 2008 - 7:21pm.

I meant small business owners, many who are now probably suffering monthly cash flow loss.

equalizer wrote:I meant small
Submitted by nostradamus on July 27, 2008 - 8:23pm.

equalizer wrote:
I meant small business owners, many who are now probably suffering monthly cash flow loss.


Some mid-to-large size SD companies are pending layoffs. I know of 2 and another that will shut down if it doesn't get another round of funding by December. Yet I know of others that are still hiring.

BTW how is the venture capital market?

how is the venture capital
Submitted by bsrsharma on July 27, 2008 - 8:42pm.

how is the venture capital market?

Pessimism From Venture Capitalists

It’s a dreary time for Bay Area venture capitalists. Investments are slowing and exits are stalled. Venture capitalists don’t expect the I.P.O. drought to ease until 2010, according to a new survey of dealmakers by audit, tax and advisory firm KPMG. Only 9 percent of those surveyed think I.P.O. activity will pick up next year and 12 percent predict it will never again reach historic levels....

http://bits.blogs.nytimes.com/tag/ventur...