In This Issue -- GOVERNOR VISITS SAN FRANCISCO The first half of 2007 is off to a fast start. The SFCED, with great investor support and market intelligence, already has worked with more than 260 companies, consultants, and foreign representatives interested in a San Francisco location. If this current rate continues, we should more than double our 2006 output. Keeping San Francisco top-of-mind as a desirable site for business location and expansion in core sectors is a primary goal of the SFCED. We recently participated in the California Solar Conference, which provided many opportunities to network and meet with prospective companies interested in the City’s renewable energy prowess. San Francisco already operates the largest city-owned solar power plant in North America, and intends to spend upwards of $100 million in bond revenue to develop public-private partnerships aimed at dramatically increasing solar capacity. Biotechnology also continues as a dynamic and important focus for SFCED outreach efforts. We recently joined with other state economic development agencies under the banner of “Team California” to showcase the City and State at BIO 2007, the industry’s major international conference, which attracted more than 22,000 attendees to Boston in April. As a result, the SFCED will follow up with more than 70 qualified leads. San Francisco is one of the most dynamic and sought-after locations for biotech firms due to its strong combination of available, entitled land, existing lab space, superior scientific talent and the highest concentration of venture capital in the world. More than 30 biotech firms now call San Francisco home, a dramatic increase from just three firms in 2003. On Tuesday, June 5, Governor Arnold Schwarzenegger will present A Vision for California, addressing health care, global warming, energy, infrastructure and economic vitality, at the PG&E Auditorium (77 Beale Street). Former San Francisco Mayor Willie L. Brown Jr. will emcee the event. Registration begins at 1:30 p.m., followed by the program from 2-3 p.m. To reserve your spot or for information, please contact Patricia Aleman at paleman@sfchamber.com or call 415.352.8841 The continued addition of flights from SFO plays a major role in the economic vitality of the region. Congratulations to Airport Director John Martin and his team for these recent and upcoming additions: Jet Blue: Service to New York and Boston began on May 3, and will expand to Salt Lake City in July. United Airlines: Additional daily flight to Frankfurt, as well as three weekly flights to Hong Kong. New daily service to Taipei will begin June 7. Frontier Airlines: Added a second daily flight to Las Vegas. Southwest Airlines: Will offer a total of 18 daily, nonstop flights to Chicago, San Diego, and Las Vegas with connections to 46 other cities, beginning August 26. Virgin America: With recent approval from the U.S. Department of Transportation, Virgin America will begin service this summer with initial flights to New York and plans to expand to Washington D.C., Los Angeles, San Diego and Las Vegas. Recent data from the Project on Emerging Nanotechnologies indicate that the Bay Area is the leading nanotechnology center in the country. San Francisco is home to 31 firms, placing third behind San Jose and Boston, with 38 and 36 organizations, respectively. The City’s biotech hub is changing by the week, as new buildings, a new hospital campus, housing and parking structures take form. Lowe Enterprises has begun work on a 300,000-square-foot Class A speculative office development, including 8,000 square feet of retail space. Alexandria Real Estate Equities has just completed its first “spec” building at 1700 Owens Street, and is beginning construction on two new buildings at 1500 and 1600 Owens Street. Shorenstein Properties also is constructing two lab buildings at 409 and 499 Illinois Street. In addition, seven housing projects have been completed, with a combined total of more than 1,500 units. Another seven housing projects are currently under construction, and when they are finished there will be approximately 6,000 housing units at Mission Bay. The strong market continues, with 15 consecutive quarters of net absorption. The second quarter of this year has been brisk, primarily driven by companies expanding within the City. Global investment firm Babcock & Brown exemplifies this trend, having expanded from 50,000-square-foot offices on Harrison Street to 155,000-square-foot offices at the Letterman Digital Arts Center. In addition to company expansion within the City, Downtown real estate continues to thrive as biotech and IT companies increase their presence. Notable occupancies include Google’s 210,000-square-foot offices at 345 Spear Street, and Microsoft at the Westfield San Francisco Centre. As availability continues to tighten, Class A vacancy has shown a considerable decrease to 8.9%, compared to 11.5% during the same period last year. Class A rents in the Financial District average $44.50 per square foot, while the City-wide Class A average is $42.01 per square foot. This activity will continue to push the rates of surrounding sub-markets as some tenants try to avoid the rates of the central business district. Large blocks of contiguous space are dwindling in the market, as a result of companies’ expansion or renewal of lease agreements, and the fact that no newly constructed space is coming on line until 2008. UNEMPLOYMENT
EMPLOYMENT BY SECTOR Between February 2007 and March 2007, the total number of jobs in the San Francisco region increased by 5,100, amounting to 978,500 jobs in total.
HOME SALES
BUILDING PERMITS
With an annual increase of roughly $149 million, San Francisco leads the way in the value of commercial construction permits issued. In the same twelve month period, San Jose comes in second with an increase $127 million, and East Bay is third.
INFLATION
AREA PAYROLL EMPLOYMENT
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