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High Unemployment Is Lingering in South and East County Cities in San Diego

Rate Might Contract Further in the Coming Months Once Coronavirus-Related Restrictions Are Lifted

By Joshua Ohl CoStar Analytics May 13, 2021 | 1:58 P.M. San Diego's unemployment rate fell to 6.9% in the latest jobs report from March, down from a revised 7.2%. But high unemployment rates in south county and east county cities are still lingering.

The unemployment rate accounts for the entire county of San Diego, which comprises 18 cities, each of which records its own monthly unemployment rate.

The unemployment rate for the city of San Diego — which includes primary office-using areas in the University of California San Diego area, Sorrento Mesa and downtown — is 6.6%. And while office leasing has slowed during the pandemic, these areas, with the exception of downtown, have received the largest new commitments in the region from life science and tech tenants over the past several quarters. The overall office vacancy rate for the city is 12.9%, a bit higher than the overall average for the region.

Importantly, the recent employment report was for data prior to San Diego climbing out of California's most restrictive purple tier, which severely curtailed retail activity. That rate might contract further in the coming months once coronavirus-related restrictions are lifted in mid-June and businesses are able to return to normal. That should provide a lift to the retail sector, particularly downtown, where the retail vacancy rate has increased by more than 3% since the middle of 2020.

With the summer approaching, tourism is anticipated to begin returning to the region, which will be a lift to downtown hotels, and in the process, bring back leisure and hospitality workers who have been sidelined for more than one year. That employment sector has shed more than 55,000 jobs in the region over the past 12 months.

Conventions are likely to begin returning to the region by the end of the year, which will provide a significant boost to downtown retailers and hotels, where current occupancy rates are only 41%.

Carlsbad, another important job node in San Diego that has been a popular target for life science and logistics expansions over the past year, has an unemployment rate of 5.6%. Like downtown, the rate will likely contract further once the summer returns and tourists begin pouring into the local beaches and Legoland.

Meanwhile, the cities located in south county and east county, such as Imperial Beach, National City, El Cajon, Lemon Grove and Chula Vista, still have concerningly high unemployment rates. Many of the residents in these cities work in the service industry and retail trade, many of whom have been slow to return to work for a variety of reasons from daycare responsibilities, school closures or extra unemployment benefits.

One further drag on some of these cities returning closer to full employment may be finding enough workers to fill openings. Competition among businesses to hire enough employees has been exceedingly high, particularly among retailers and the leisure and hospitality industry, and finding enough workers to fill openings has been extremely difficult. Many of those workers are receiving an extra $300 per week in unemployment benefits after Congress passed the latest stimulus package that lasts until September.

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