With the continued exodus of companies from Silicon Valley due to rising property costs, entrepreneur and marketing guru Ryan Mack sounded off a warning for San Diego to learn its lessons to avoid falling into the same trap.
The report from Working Partnerships USA (WPUSA) revealed that between 2009 and 2015, the mean rental cost for an apartment in San Francisco—particularly in the Silicon Valley area—rose 32.2%. The cost of properties has risen almost four times in that span compared to the wages that workers earn.
“That means that even if the average employee in Silicon Valley is earning more than the national mean wage, all that extra money will still go to the cost of renting an apartment,” he said. “Already, families are spending more than half of their income on rental costs alone. It’s not going to be sustainable for the long-term.”
San Diego has successfully repositioned itself as a tech hub and as an alternative to Silicon Valley for locators. In fact, a number of Silicon Valley companies have already transferred their operations in the Bay Area. Brain drain is a real and present danger as outbound job searches continue to multiply.
A 2017 report from Indeed.com, a job-searching website, claimed that from 2012 up to last year, the number of job searches from inside Silicon Valley grew 67%. It was by far the highest compared to any other big cities like New York, Los Angeles, Boston, and Seattle.
The study concluded that the living standards in Silicon Valley have become so prohibitive that they have no choice but to relocate. For instance, the average rental in the area already breaches the $3,000 mark. Compare that to just the national rental mean of $1,200.
The housing crisis is driving all the talents away. This premise is supported by the fact that 59% of employees from 45-54 years old are also participating in the outbound job search. This is the age group that is looking for stability, and not moving around.
“The standards of living in San Diego is lower than in California, which is why it’s quite attractive for tech companies to relocate here,” Mack said. “For instance, the $5,000 you spend in the Bay Area would balloon to $7,700 when you move to Silicon Valley.”
“In addition, rental prices are about 40% lesser in San Diego compared to Silicon Valley while the local purchasing power is 25% more. The savings you get when you transfer your business or if you work here is substantial,” he added.
But if the government and even the property sector is not prepared to absorb the growing migration, San Diego will follow the same mistakes that Silicon Valley did. “While the government certainly is cognizant of the problem, there’s a huge gap between knowledge and addressing the problem.”
“This is why everybody has to act now. Let’s study the lessons of Silicon Valley and apply them to San Diego so it can better support its goal of becoming the next tech hub,” Mack added.