By Robert Sammons, Senior Director, Northern California Research
It seems a week hasn’t gone by this year when a new project hasn’t been announced for downtown San Jose. This week, of course, isn’t any different with a developer planning a mixed-use project including offices, residential and retail. It doesn’t hurt that there are a variety of rail transit options within the core of the Bay Area’s largest city AND that there is developable land and a relatively quick approval process in place.
The “great city to the north” (as it’s referred to in the San Francisco-based Alfred Hitchcock movie Vertigo) could learn a thing or two about that last point in particular. One transit option that won’t exist in the foreseeable future, if ever, in San Jose or San Francisco is a high speed rail line to Los Angeles. While Governor Newsom has pulled the plug on most of the project, he still expects the Central Valley portion to move forward. What this means for the yet-to-be-reopened Transbay Transit Center and any potential expansion of Caltrain into the core of the city is not yet clear.
That said, Tech hasn’t exactly stopped expanding here in San Francisco with Google leasing even more space in the City. Expect other tech-driven leasing announcements here and in Oakland shortly. The Bay Area isn’t the only place where this sector is expanding, with a number of markets on the radar of these mega companies.
On a related note, as mentioned briefly last week, we continue to track numerous Bay Area-based tech companies preparing to go public in 2019 – it will be the biggest year ever in fact with five local firms at valuations well above $10 billion. But there won’t be just tech IPOs this year. San Francisco-based Levi Strauss will be among the local firms going down that road as well.
Tech along with many other industries have added jobs in the Bay Area at a furious pace during this soon-to-be-record-long economic expansion. Tech, in particular, is expanding seemingly everywhere but this is still the center of it all and will likely be for a long time to come. Despite numerous challenges here, the depth of talent is so great and there are SO many companies located here that it’s hard to stop that runaway train. Some braking has been applied but more because of a lack of office/R&D product or housing than anything else. Being at full employment across the region has become more of a hindrance and we’re not really growing the labor force as quickly as necessary. That said, nonfarm employment for the San Jose MSA expanded by 3.3% in 2018, its best performance since the 3.6% in both 2015 and 2014.
The pace has slowed for both San Francisco and Oakland, however. For the San Francisco metropolitan division (San Francisco and San Mateo counties), nonfarm job growth registered 2.2% last year, down from 2.3% in 2017 and its most recent high of 4.6% in 2015. For the Oakland metropolitan division (Alameda and Contra Costa counties) nonfarm job growth rang in at 2.0% in 2018, down from its recent high of 3.7% in 2015. The region as a whole now has a record number of jobs – up a whopping 902,000 since the expansion began. To put it in perspective, that’s like adding as many jobs as the entire population of San Francisco. How much more we can grow remains to be seen, but thus far we have blown past all forecasts.
This post is commentary from the latest weekly edition of our NorCal Newsline, which you can subscribe to for free by e-mailing firstname.lastname@example.org.
Robert Sammons is Cushman & Wakefield’s Senior Director, Northern California Research. Based in San Francisco, Robert’s principal roles include working closely with the C&W research teams across the Northwest – including Northern California, Portland and Denver. Robert is author of numerous documents that delve into a wide variety of real estate and economic trends. He has been a quoted source for all manner of real estate and related economic information in many widely known media outlets across the country. Robert has 29 years of real estate experience as both an appraiser and researcher. He earned a BBA in Real Estate from The University of Georgia and an MS in Real Estate from Georgia State University. Robert is a member of the Urban Land Institute.