SoCal Leads in Aerospace and Defense as Talent Attracts Capital

Southern California has been an absolute machine for employment in the aerospace and defense sectors, which leads the country, according to David Fan, JLL's senior director of research.

Approximately 20 percent of the jobs are in occupations related to final assembly, such as welding, cutting and sodding, while the majority are in the engineering and design phases.

Additionally, the ecosystem is an excellent example of a Public-Private Partnership, with federal funding not only awarding contracts to companies but also supporting educational institutions and research organizations such as The Aerospace Corp. and JPL.

"Local-level leadership is important," Fan said. "Municipalities in the South Bay, starting with city mayors, serve as great enablers of deepening the ecosystem – fast-tracking permitting, public security, etc.

"The clustering effect is a driver itself for increasing the SoCal Innovation cluster, with out-of-market companies drawn to the region for talent and connectivity to peers, suppliers, and customers."

This is No Accident

The region's momentum is not accidental, according to a Southern California Innovation Landscape Report from JLL.

It's the product of deep institutional strength, a highly skilled workforce and a wave of capital flowing into next-generation technologies that require specialized real estate, sophisticated talent and proximity to established industry anchors.

The aerospace and defense sector is the clearest example of this transformation. Federal defense spending is rising and Southern California is a direct beneficiary. The proposed FY27 budget allocates $55 billion to the Defense Autonomous Warfare Group, accelerating the development of drones and autonomous systems.

This aligns with the region's own trajectory: Southern California leads the nation in aerospace job creation and its drone sector alone is projected to grow at a 15.9% CAGR over the next five years.

Legacy prime contractors—long the backbone of the region's defense economy—continue to provide stability, but the real energy is coming from venture-backed, high-growth companies redefining what aerospace looks like in the 2020s. LA's South Bay, in particular, has become a magnet for these firms, signaling a durable shift in the innovation landscape.

Capital markets are reinforcing this momentum. Venture investment is increasingly flowing toward aerospace and defense, a notable pivot after years of software-centric funding.

This shift signals long-term confidence in the region's ability to commercialize complex, hardware-driven technologies. These companies demand high-power, modular and secure real estate, creating new opportunities for landlords and developers capable of delivering specialized infrastructure.

A Boost from Academics

Southern California's academic institutions amplify this growth. The region awards the most STEM degrees in the country, continuously replenishing a deep labor pool that fuels innovation. This talent density is one reason Southern California hosts the nation's largest concentration of innovation-driven companies across aerospace, biotech, clean tech and advanced manufacturing.

Life sciences adds another dimension to the region's innovation economy. San Diego and Orange County are evolving from pure R&D hubs into full-scale biomanufacturing ecosystems. Tenants are increasingly seeking GMP/cGMP facilities and medical device production capabilities in secondary submarkets where they can scale more affordably.

San Diego's innovation engine remains particularly strong, evidenced by 57,000+ patents granted over the last five years—with the output that cementing its role as a national research powerhouse.

Orange County Leads in Defense

Moreover, Orange County is emerging as a center for next-generation aerospace and defense technology, benefiting from its proximity to both LA's venture-driven ecosystem and San Diego's life sciences cluster.

Meanwhile, Los Angeles is transitioning from traditional manufacturing to advanced manufacturing, led by aerospace, pharmaceuticals and clean tech.

Taken together, these forces create a self-reinforcing cycle: strong institutions produce talent, attracting capital, which fuels innovation and innovation-driven demand for specialized real estate. The result is a region that is not just participating in the next wave of technological advancement but actively shaping it.