July 2010

Economic Recovery Will Be a Long, Slow Climb

In its second quarterly report of 2010, the UCLA Anderson Forecast makes the case for a tepid recovery from the national recession, with unemployment levels slowly declining. The California economy is expected to grow a bit slower than the nation's for 2010, and slightly faster thereafter. The forecast calls for health care, professional and business services, exports, construction and technology-related manufacturing to generate the most growth.

(Source: Anderson School of Management)

Bay Area and California Unemployment Rates Rise

California's adjusted unemployment increased in June, reaching 12.2%, up from 11.9% in May 2010. San Francisco's unadjusted unemployment rate increased to 9.6% from 9.2% a month ago, and has held steady when compared on a year-to-year basis. San Francisco has the 7th lowest unemployment rate of all California counties.

Bay Area Unadjusted Unemployment Rates

Source: Cal EDD

Historical Unemployment - San Francisco, CA, USA

Source: Cal EDD, BLS

Bay Area Home Sales Improve; Median Price Up 16 Percent

The number of Bay Area homes sold last month inched up from May, but fell short of a year ago as the impact of the federal home buyer tax credits began to fade. The median sales price remained 16.5 percent higher than last year, thanks largely to fewer foreclosures re-selling and more high-end activity.

Home Sale Volume and Median Prices - May 2010

Source: DQ News

Venture Capital Remains Positive on California; Renewable Energy "Hot"

Venture capital investment reached almost $4 billion in California during the second quarter of this year, a 51% gain from the same period last year and the best quarter since Q3 2008. The number of funded companies also rose, up 8 percent over a year ago, according to Dow Jones VentureSource, which collected the data.

The data shows that venture capitalists poured more than 51% of the $7.7 billion invested nationwide into California, accounting for 296 of the total 744 deals.

The second quarter was the first time investment in renewable and alternative energy ventures topped that for either healthcare or technology in total dollars, according to Dow Jones VentureSource. Venture capital investment is approaching pre-recession levels.

Bankruptcy Filings Up 35 Percent

The number of total bankruptcies in the San Francisco division has increased almost 35% over a year ago, to 440 filings in June. The June number represents a 4.5% increase from May 2010, and the highest number of filings on a month-to-month basis since 1999.

Source: United States Bankruptcy Court, San Francisco Division
*Includes San Francisco and San Mateo Counties

Site Selectors Cite Criteria

In a recent survey conducted by Area Development magazine, 26 factors were identified as critical elements to the site selection process. The top five were:

1. Labor costs
2. Highway accessibility
3. Tax exemptions
4. Energy availability and costs
5. Corporate tax rate

In the same survey, respondents were asked to name the most important "quality of life" factors in the selection process. The top five were:

1. Low crime rate
2. Healthcare facilities
3. Housing availability
4. Housing costs
5. Ratings of public schools

San Francisco ranks well in some categories (highway accessibility, tax exemptions, healthcare facilities), but low in others (labor costs, corporate tax rate, housing costs). In order to stay competitive, San Francisco must highlight the positives, and work where possible to reduce the negatives associated with the high costs of doing business in the City.

Vacancy Rates Spike; Rates Remain Flat

According to data released by Cushman and Wakefield, asking prices for Class A space have stayed relatively constant, while the vacancy rate has spiked to 15.6%, the highest rate since Q2 2008. Part of the spike in the vacancy rate is due to the fact that the Van Ness Corridor saw an increase of almost 13 percentage points in direct vacancies over the first two quarters in 2010.

Source: Cushman & Wakefield

Passengers and Cargo On the Rise at SFO

According to data released by Cushman and Wakefield, asking prices for Class A space have stayed relatively constant, while the vacancy rate has spiked to 15.6%, the highest rate since Q2 2008. Part of the spike in the vacancy rate is due to the fact that the Van Ness Corridor saw an increase of almost 13 percentage points in direct vacancies over the first two quarters in 2010.

SFO accounts for 62% of the Bay Area's domestic and 97% of the region's international passenger traffic for a total of 68% of the regions passenger traffic. International traffic has continued to grow with the recent additions of Swiss Air, Air Berlin, West Jet, Virgin America (Toronto destination), and most recently Lan Airlines, with flights to Lima, Peru and Sao Paulo, Brazil.

"Puts and Takes" in State Migration

According to United Van Lines' annual migration study of 143,000 interstate household moves, California achieved a near-perfect balance of gaining approximately the same number of residents as were lost. The District of Columbia maintained its lead as the top U.S. destination for inbound migration, while Michigan continued its position as the state with the highest percentage of outbound households.

QuickFacts is produced by the San Francisco Center for Economic Development (www.sfced.org).