$8 gasoline, a convention center remake, robotaxis: San Diego business stories to watch in 2026

These are some of the key business stories to watch in San Diego County in 2026 as selected by U-T business reporters.

A long-sought convention center expansion remains in limbo

After years of infighting and litigation, a hotel tax hike approved by San Diego voters in 2020 is already generating substantial funds to help finance an enlarged convention center, homeless services, and road repairs. Trouble is, the cost of an expansion, calculated many years ago, has since soared, and it’s very unlikely that same project — already approved by the California Coastal Commission — could be adequately financed today, even with the extra hotel room tax revenue that will be collected over the next 40 years. Last May, the city started levying the higher hotel tax rate, anticipating that it would likely prevail in court, which it has. More than $35 million already has been raised, and over the first 10 years, the increase is expected to generate $1.04 billion in additional revenue. Adding to the uncertainty surrounding the fate of the project is the city’s lack of control over a key waterfront parcel that would be needed to expand the center. Fifth Avenue Landing currently holds a lease for that parcel, which expires in mid-2027, and city leaders are mum on what comes next, saying that a 2018 settlement agreement with FAL prevents them from moving forward with a development plan at this time. That prohibition should lift by Dec. 31, 2026.

Will San Diego’s real estate market pick up?

As of October, 2025 was on track to be one of the slowest years for home sales, with 22,776 sales, in San Diego County. The lowest year was 2023, with 25,317 sales, according to records dating to 1988. Many in the real estate industry hoped lower mortgage rates would kickstart the market, but that didn’t happen. It remains to be seen if this is a long-term trend or one of those rare, brief hiccups in the ultra-valuable San Diego market.

Construction expected to start on 101 Ash St. apartments

The tortured tale of the city of San Diego’s empty 101 Ash St. office tower appears to have reached its climactic turning point, with the city and its prospective lessor now anticipating the close of escrow on a 60-year lease and redevelopment deal before the end of June. In December, housing developers MRK Partners and Create Dev LLC secured most of the federal tax credits required to fund the tower’s conversion to apartments for low-income families. The development team expects to start construction shortly after the close of escrow.

What will happen to gasoline prices in 2026?

The closing of two major refineries in California has raised concerns that gas prices may spike in the new year. Phillips 66 planned to shutter operations at its twin refinery in the Los Angeles area by the end of December. And Valero is scheduled to close down its 145,000-barrel-per-day facility in the Northern California city of Benicia in April. Since the Valero and Phillips 66 facilities combine to account for about 18% of the state’s crude oil capacity, fuel analysts warn the shutdowns will strain supplies of the specially blended gasoline that is sold to California drivers. University of Southern California management professor Michael Mische has predicted gas prices could soar to $8 a gallon by the end of 2026, although Gov. Gavin Newsom’s office dismissed Mische’s white paper as “mere guessing.” To help counteract the refinery closures, Sacramento lawmakers — at Newsom’s urging — passed SB 237 that includes provisions to boost crude oil production in the state, particularly in the Bakersfield area, where the largest concentration of derricks are located.

Short-term rental hosts gear up for potential new tax

In a move to boost housing affordability — and availability — in San Diego, Councilmember Sean Elo-Rivera has proposed levying a tax on vacation rentals and “vacant” second homes that owners are not renting out on a long-term basis. While vacation rental hosts already pay a $1,129 fee for a two-year license, Elo-Rivera has argued that a hefty financial disincentive is needed to discourage property owners from renting out second homes and investment properties for less than 30 days at a time. The proposal, which Elo-Rivera would like to see go before voters in June, has proven divisive and drawn the strong objections of Airbnb and the San Diego Regional Chamber of Commerce, which fears the tax would punish locals the most. The particulars of the proposal are still being worked out, but some key changes are already in the works. While Elo-Rivera had initially proposed a per-bedroom fee of $5,000, he says there will be no charge per bedroom but rather a base rate for each commercial vacation rental and empty vacation home. That amount, though, has yet to be determined. In addition, says Elo-Rivera, corporate-owned properties and repeat nuisance rentals would pay more. He emphasizes that the tax would not affect 99% of San Diegans, including those who rent out the home they live in for only a part of the year. Excluded, he says, is “any home that a San Diegan calls home.”

Life science investment slows, but are IPOs on the horizon?

Venture capital investment in San Diego’s life science sector slowed significantly in 2025, and next year will be more of the same, according to industry insiders — though it’s not necessarily a bad thing. San Diego experienced an influx of investment during COVID, and while spending has slowed since then, there is still sector growth fueled by diligent investing. “I think this has been one of the most successful years in biotech financing,” said Jeff Stein, CEO of Cidara — which is being acquired by Merck for over $9 billion. Stein has worked in the San Diego startup scene for decades and recognizes periods like this. “There has been a lot of secondary financing … It looks like the IPO window is going to open.”

Rental changes in San Diego

San Diego County rents, as of December, were down year-over-year — something not seen in 15 years. Meanwhile, apartment construction still chugs along. Big projects set to open include Alexan Camellia in Convoy District with 531 units and Broadstone Mission Valley with 497. It remains to be seen if new apartments can command high rents, considering prices have been flat, or slightly down, for nearly two years.

Robotaxis scheduled to hit San Diego’s roads

Waymo van in downtown San Diego

Though the Silicon Valley tech company Waymo has not set a specific date, executives plan to bring fully autonomous ride-hailing services to San Diego in 2026. Locals have spotted a fleet of all-electric Zeekr RT minivans, with humans behind the wheel, that continue to test and assess Waymo software. The robotaxis plan to be concentrated in central San Diego, in areas such as the Gaslamp Quarter, downtown, Grant Hill, Logan Heights and Pacific Beach. But not everyone is a fan. The Taxi Advisory Committee at the Metropolitan Transit System and local labor unions have come out in opposition, saying robotaxis will undercut the incomes of taxis, Uber and Lyft drivers, food delivery workers and package/courier service drivers.

Distressed sales of downtown office tower to continue

While the downtown office market appears to have hit its bottom with the Irvine Company’s exit, the fire sale of middling properties will continue into the new year. More second-tier office buildings will trade in distressed transactions, such as short sales or bank auctions, said industry insider Richard Gonor, an executive with Jones Lang LaSalle. As it stands, a handful of properties are either currently on the market or are expected to be traded in 2026. The list includes the remaining Regent Properties assets at 1 and 2 Columbia Place and 701 B St. In addition, the historic Centre City Building at 233 A St. is being marketed for sale as a residential conversion project. And DivcoWest’s recently refashioned Little Italy property at 1420 Kettner is said to be for sale.

Lots of (delayed) economic reports

The federal government shutdown delayed dozens of economic reports that could provide a better picture of how life is for San Diego workers and businesses. Unemployment reports have been delayed by months, but should start coming out with more frequency in January. Other key data that should finally return early next year include inflation, wage changes and gross domestic product.

Can EVs survive without federal subsidies?

Gov. Gavin Newsom has set an ambitious goal to eliminate the sale of all new gasoline-powered passenger vehicles throughout California by 2035. But the “One Big Beautiful Bill” backed by Republicans on Capitol Hill and signed into law by President Donald Trump included provisions that eliminated the federal tax credit of up to $7,500 on the purchase or lease of new electric vehicles, effective Sept. 30, 2025. California has nearly 2.5 million EVs and plug-in hybrids on the road, but the loss of the tax credit has raised questions about whether the state’s 2035 mandate will be met. State policymakers say they are undeterred. In October, California Air Resources Board Chair Lauren Sanchez said, “While the federal government stumbles backward with reckless rollbacks and short-sighted policies, California charges ahead, lighting the path to a cleaner, more prosperous future.”

Noelle Harff, Phillip Molnar, Rob Nikolewski, Jennifer Van Grove and Lori Weisberg contributed to this report.