ORANGE, California – When people think of Orange County, most people think of Disneyland first, and then the beaches, and maybe the TV shows The Real Housewives of Orange County or The OC
Not many relate Orange County to a major technology and innovation hub. But Palmer Lucky founded the virtual reality company Oculus in Irvine, the semiconductor company Broadcom has established a foothold here, as well as Blizzard Entertainment and Edwards Lifesciences and much more.
What you need to know
- Orange County has a long history as a technology and innovation hub
- The new Chapman-UC Irvine Innovation Index shows Orange County’s innovation and technology job ranking has dropped from 13th to 18th place over the past two years
- Business and Orange County executives should promote Orange County as a major technology player, say business and college leaders
- A handful of tech and innovation companies signed major leases in Orange County in 2020 despite the pandemic
Despite the number of well-known technology and innovation companies, Orange County is falling behind other technology centers across the country, according to a recent study by UC Irvine and Chapman University presented during Chapman University’s 2021 Economic Forecast.
Orange County fell from the 13th in 2018 to the 18th in 2020, according to the Chapman-UC Irvine Innovation Index, which measures the county’s progress in creating jobs in the technology and innovation industries. The metropolitan area of San Francisco, Oakland , Hayward was number 1 in 2020.
If Orange County is to fully recover from the coronavirus-catalyzed downturn and to develop and grow its economy, business leaders and city officials must focus on finding innovation and technology jobs here, according to Chapman officials and business leaders.
“For our county to thrive in the future, we need to focus on attracting and growing innovation jobs,” said Michael Mussallem, CEO of Edwards Lifesciences, during the Chapman Economic Forecast. “Orange County’s current forecast is too reliant on tourism and retirement money, which leads to too many low-paying service jobs. Then we have a two-tier economy, rich and poor, and frankly, uninspiring prosperity.”
“Instead, we need to create and grow companies in Orange County that need high-level talent,” Mussallem said.
The Chapman-UCI Innovation Index comes as Orange County faces a crossroads. Orange County has been hard hit by the economic downturn caused by the pandemic. Up to 200,000 jobs in Orange County were lost when the pandemic broke out and tourism declined due to the closings of Disneyland, Knott’s Berry Farm and several hotels. Orange County’s unemployment rate fell to 6.4% in December. According to the Voice of OC, it was 2.6% last year.
As service jobs increased, tech, biotech, and innovation jobs performed better across the county and, in some cases, flourished even though workers had to work from home.
Marshall Toplansky, professor of management service at Chapman University, said Orange County needed to deviate from service jobs and create more high-paying tech and innovation jobs. Toplansky is one of the researchers leading the innovation index.
“This has very serious implications for our economic future,” said Toplansky. “The high-paying jobs for Orange County will come from the advanced innovation industry.”
The Chapman-UC Irvine Innovation Index is a unique indicator of whether the region is emerging as a hub for the technology and innovation economy, Toplansky said.
The study uses, among other things, the Brookings Institution’s definition of innovation industries such as pharmaceutical and medical manufacturing, aerospace, software publishers, satellite telecommunications, data processing, scientific research and development services, and manufacturing of semiconductors and other electronic components.
The report uses data from the Bureau of Labor Statistics and tracks 22 MSAs across the country.
The indicator is part of an effort to find out where Orange County stands among its competitors in terms of technology and innovation jobs. According to the Index, Orange County has fallen five places in the past two years. At the same time, other areas like Los Angeles fell from sixth to ninth place; Phoenix rose 16 places from 19th to third and Salt Lake City rose from 22 to fifth.
“We are in a highly competitive battle in the US to attract high-paying jobs in the region,” said Toplansky, adding that Orange County’s decline is due to the fact that tech jobs have not been so high in recent years and innovation was created.
Orange County’s main problem with these types of jobs is the high cost of living. Property prices are lower in Austin, Phoenix, and Salt Lake City, making it easier for workers to find affordable homes. The average price for a home in Orange County is nearly $ 800,000, an 8% increase from last year. The average home price in the Austin metropolitan area is $ 365,000. Meanwhile, the Phoenix and Salt Lake City subway stations have average home prices of $ 412,000 and $ 425,000, respectively.
California, where tech companies have left the state, also has the highest state income tax rate in the country at 13.3% and one of the highest energy bills.
“We don’t have the same problem that Silicon Valley has with Big [company] Names go, but not much comes in, “said Toplansky.” It drips a little, but the bucket won’t refill. “
While living and working in Orange County has a negative impact, the lifestyle and high quality of life cannot be beat, he said. Year-round beautiful weather, expansive beaches, and amenities like Disneyland, the mountains, and world-class entertainment within a 30-minute to hourly drive are attractive amenities.
Orange County is also centrally located. Corporations can attract potential employees across Southern California from many world-class institutions including UC Irvine, Chapman, USC, UCLA, and the California State University system, Toplansky said.
“The base for educated talent is here,” he said. “And the lifestyle is incredibly attractive to people.”
Scott Wetzel, executive vice president of commercial real estate company JLL, said Orange County has always been a great place to set up a headquarters. Aside from tech companies, Orange County has a strong life science base, he said. In Wetzel, several technology companies rented offices in Orange County in 2020, despite the pandemic.
Panasonic Avionics, a subsidiary of Panasonic that specializes in the manufacture and sale of airline entertainment products, is moving to a 258,000 square meter office building in Irvine.
Tech company Ultimate Kronos Group (UKG) signed a contract to occupy a 93,000-square-foot office building in Santa Ana, and gaming company Mobilityware moved into a 50,000-square-foot office in Irvine.
“Although we reportedly slipped (according to the Chapman UCI index), investment in technology and innovation companies remains strong,” said Wetzel, who specializes in Orange County’s office market. “In 2020 we had 55 companies with a presence in Orange County that raised nearly $ 1 billion. It was just over $ 1 billion last year, but we’re pretty much on par with last year.”
Wetzel said Orange County is checking many boxes for technology and innovation companies. He mentioned the district’s strong educational base and office infrastructure.
According to Wetzel, the biggest problem the district is facing is public relations. Orange County has a solid foundation for technology, innovation and life sciences.
“We just have to get the word out,” he said.