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Apple Boosts Hiring Plans, This Time Sending Ripples Through San Diego

To get a sense of how a decision by a national employment powerhouse like IPhone maker Apple Inc. can affect a U.S. city, take a look at San Diego.

Apple said it wants to take a bigger bite out of San Diego's technology workforce, a move that's likely to require more real estate in a region already brimming with demand from major life science companies and technology firms such as online retailer Amazon.

Apple said it now plans to employ 1,200 people at its anticipated new San Diego offices, up from the 1,000 employee figure it announced in December when it revealed its intention to move into the Southern California city as part of a larger nationwide expansion. The company expects to need "hundreds of thousands of square feet" of real estate in San Diego to accommodate its growing team in the area.

Kristina Raspe, vice president of global real estate for Cupertino, California-based Apple, said in a statement the company is boosting by 20 percent its original estimate of local employment for engineering-related workers over the next three years. Raspe said the company expects 170 of those employees to be in place by the end of this year, though the company has not divulged their specific work focus.

"San Diego will become a principal engineering hub for Apple, with new positions distributed across a number of specialty engineering fields, to include both hardware and software technologies," Raspe said.

Irvine Co. owns the Eastgate Terrace office building in San Diego's University Town Center neighborhood. Photo: CoStar

"While we haven’t yet settled on a location, plans are also underway to develop a campus that will feature hundreds of thousands of square feet of office, lab and research space," she added.

Apple has the ability to make ripples in an area with its growth. The company said last year it was expanding its facilities in Austin, Texas, a site the company is making its biggest staffing center outside its Silicon Valley headquarters in California. That announcement was big news locally for its effect on boosting property values and real estate demand.

In the case of San Diego, the Apple hiring increase is the latest sign of strength for the University Town Center neighborhood that is expected to serve as the tech giant's local landing spot.

Apple and local landlords have declined to discuss specific addresses, but several commercial brokerage firms have reported that Apple has leased the full 96,543 square feet at Irvine Co.’s Eastgate Terrace office building, at 9779 Towne Centre Drivein UTC. Observers have speculated that location could serve as just a temporary space for the company as its sets up its new local operations.

Apple for several years has had a limited presence in San Diego and currently employs 600 people at five Apple retail stores in the region. San Diego Mayor Kevin Faulconer has publicly said he met in recent weeks with Apple officials to discuss broadening previously announced plans for new engineering-related positions in the region.

Located in northwestern San Diego, UTC was among the region’s most active neighborhoods for office investment and leasing during the past year, with big renovations and purchases by landlords including Newport Beach, California-based Irvine Co., which now owns almost half of all UTC office inventory.

Spurred by continued demand among financial services, life science and other technology tenants -- recently including e-commerce titan Amazon., which opened a new office there last fall -- UTC is among the region’s most expensive office markets. A large, well-heeled company like Apple moving in and taking up more space could push those prices even higher.

CoStar Market Analytics data as of March 7 showed the monthly office rent for UTC at $3.55 per square foot monthly, well above the regional average of $2.69. That’s even as UTC’s office vacancy rate was 10.2 percent, slightly above the regional rate of 9.7 percent.

The busy UTC submarket also has several retail and multifamily development projects underway. In February, it was home to San Diego County’s biggest commercial deal so far in 2019, when Raintree Partners of Dana Point, California, purchased the 333-unit Regents La Jolla apartment complex for $141.5 million from Chicago-based LaSalle Investment Management.

Article By: Lou Hirsh, CoStar

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