San Francisco Center for Economic Development

IN THIS ISSUE

- San Francisco: 2005 Overview, 2006 Projections

- Virgin America Lands in San Francisco

- San Francisco Ranked No. 1 City in U.S.

- QB3 Opens at Mission Bay

San Francisco Ends Year On Upbeat Note

San Francisco earned good marks on this year's report card. As indicated in the articles below, the year has been successful on many fronts, and 2006 looks bright. San Francisco ranked No. 1 among U.S. cities for quality of life. The job front is positive, with large companies like Virgin America landing in the Bay Area, and developments progressively sprouting in Mission Bay.

San Francisco: 2005 Overview, 2006 Projections

San Francisco's current economic trends remain positive. Decreased unemployment rates, more than two years of positive commercial real estate absorption, new and expanded San Francisco companies, heightened tourism, increased travel, and promising planned development suggest positive economic growth for 2006.

As of October 2005, San Francisco's unemployment rate had declined 11% from 2004. While San Francisco's 2004 unemployment rate hovered around 6%, 2005 data averaged 5.1%.

The local commercial real estate market experienced nine consecutive quarters of positive absorption. According to 2004 and 2005 third quarter statistics from Cushman & Wakefield, overall vacancy rates in San Francisco were 19.4% and 16.5%, respectively, while the average asking rental rates citywide were $26.88 and $28.68.

San Francisco attracted more than 20 new companies and 10,000 new jobs in 2005. Among the new firms are LucasFilms, joining the city's digital arts arena, while the Orphanage, a visual effects studio, plans expansion in 2006. Several biotechnology companies relocated or started in San Francisco in 2005, including Sirna Therapeutics and Five Prime. The California Institute of Regenerative Medicine (stem cell) also opened its headquarters in San Francisco last year. H&M, Zara, and G-Star are 2005 additions to local retail. Juicy Couture's first flagship will open this spring, while Bloomingdale's and the Westfield Shopping Centre will open in September.

Travel activity increased in 2005, generating pre-Sept. 11 traffic levels at SFO. The city also claimed the title of favorite U.S. City for the 13th consecutive year in a survey taken by Conde Nast Traveler magazine.

Planned developments on the waterfront, including Rincon Hill, Bayview Hunters Point, and Treasure Island, will contribute to a successful 2006.

Virgin America Lands in San Francisco

U.S.-based airline start-up Virgin America Inc. has officially landed in the Bay Area. Virgin America secured $177.3 million in funding, joined U.S. investors Black Canyon Capital and Cyrus Capital Partners, and has filed for certification with the Department of Transportation.

Additional good news is that the new, low-cost carrier also announced that instead of housing its corporate headquarters in New York and its operations base in the San Francisco Bay Area, it will merge both and locate all employees in the Bay Area. Virgin America expects to directly employ up to 2,000 people in the Bay Area, and indirectly support 30,000 new U.S. jobs by its second year of business.

The San Francisco Center for Economic Development has been involved with Virgin's decision to operate in the Bay Area since 2004. "We are excited that Virgin America has begun the formal application process," said SFCED executive director Dennis Conaghan. "The potential for job growth, tax revenues, and general economic impact for the Bay Area is tremendous."

San Francisco Ranked No. 1 City in U.S.

San Francisco ranked No. 1 in a recent quality-of-life report published in Outlook magazine, ranking higher than competing cities Boston, Los Angeles, Washington D.C., New York, and Chicago.

The nationwide study based overall findings on statistical data in nine categories: arts, health, recreation, transportation, education, climate, economy, safety, and housing. San Francisco ranked first in the arts, second in health and recreation, and fourth in transportation.

QB3 Opens at Mission Bay

The official opening of the California Institute of Quantitative Biomedical Research (QB3) on Nov. 28, 2005, at UCSF's Mission Bay Campus marked Mission Bay's emergence as a world renowned biotech center.

QB3 is a joint effort between the state of California and the University of California campuses at Berkeley, San Francisco and Santa Cruz, dedicated to exploring biological systems. It is of particular significance because of its linkage to biology to physical science, and its function as an incubator for small biotech companies. Academia, venture capital, industry, and government agencies partner to increase the speed of the laboratory-to-bedside process.

Other Mission Bay developments in 2005:

August: Shorenstein Properties LLC acquired a 3.8 acre parcel, which is entitled for up to 450,000 square feet of laboratory or commercial office and retail space.
September: Alexandria Real Estate Equity, Inc., held its official groundbreaking for the 165,000-square-foot lab and office building that will house biotech startups and related businesses such as law firms and venture capital firms.
October: The state of the art, 12,500 square foot Mission Bay Community Center opened on the UCSF Campus.

For more information on these or other stories, please contact SFCED at info@sfced.org.