San Francisco Center for Economic Development

In This Issue

Digital Arts and San Francisco: Mayor Names Advisory Council, Supervisor Alioto-Pier Backs Film Industry
Mission Bay: Going, Going…
SFO: Economic Boon for the City
Real Estate Round-up

San Francisco's economic prospects keep getting brighter, as it continues to embrace the innovation for which it is known. In this issue of the San Francisco Center for Economic Development newsletter, we highlight the innovative digital arts and cinema industry.

Another San Francisco Innovation Industry: Digital Arts

San Francisco's reputation for innovation started early and has included more than the invention of television (in 1929 on Green St.) or biotech (at UCSF in the 70's).

Recently, the city has been host to a new industry, digital arts and cinema. Companies like newcomer Wild Brain, or local hero Dolby now using digital technology, make our city a digital arts powerhouse in the center of the leading region where LucasFilms, Pixar, Electronic Arts and others are based.

And here are some fresh developments in the digital arts arena:

City Welcomes Industrial Light & Magic: George Lucas' Digital Arts Center Inaugurated in the Presidio

On June 25th, George Lucas' Letterman Digital Arts Center opened officially in the Presidio. And the celebration was tremendous, featuring two US senators, the House minority leader, four San Francisco mayors, and an all-star musical cast that entertained the gathered crowd of more than 2,000 people.

Industrial Light & Magic, a Lucas company, will occupy the Letterman Space.

Digital Arts Initiative: Mayor Creates Digital Media Advisory Council

On July 12th, Mayor Newsom inaugurated the Digital Media Advisory Council, a cast of more than a dozen industry luminaries whose job it will be to promote San Francisco as a place for the digital arts.

Jesse Blout, Director of the Mayor's Office of Economic and Workforce Development notes: "This effort will be similar in approach and scope to the Mayor's Biotech Advisory Council that has been working very successfully to promote San Francisco to the biotech industry."

Film Industry - Traditional and Digital - to be a Growth Industry for the City

Earlier this year, the SFCED issued a report detailing the decline of fllm industry spending in 1996 (at $461 million) to 2002 (at $138 million). Supervisor Alioto-Pier, who has been an important leader in revving up the increased efforts to lure film, points out the promise that the industry has for the city: "I see the film industry - both traditional and digital - as one of the growth industries for San Francisco," Alioto-Pier said in the Examiner.

Supervisor Alioto-Pier is working to identify ways and incentives to lure film back and keep digital arts expanding. The SFCED applauds her efforts.

Mission Bay Parcels Keep Getting Snapped Up

Mission Bay's prospects are being realized with acquisitions intended for both commercial and rental space continuing to be made. A couple of highlights: The Urban Housing Group placed a final residential parcel under contract - the company's third. And for those who missed it, Alexandria Real Estate Equities secured a third parcel that, together with the two others it contracted, will account for more than 2 million square feet of entitled space.

Real Estate Summary: Good News, Expansion Continues

The San Francisco office market continues to experience gradual and consistent improvement since its recovery started two years ago. The citywide overall vacancy rate decreased to 17.3% down from 18.0% last quarter and down from the all-time high of 22.9% at this time two years ago. The Central Business District registered an even bigger vacancy drop over the last quarter, decreasing from 16.5% to 15.5% (Source: Cushman & Wakefield).

Why SFO Matters to San Francisco's Economy

As economic engines, airports directly and indirectly inject billions of dollars into the economy through local taxes, employment, tourism, and business revenues.

A major player in our economy, the San Francisco International Airport (SFO) provides about 50,000 jobs to the Bay Area. Regional businesses generate $2.8 billion in revenues from international traffic through SFO, and about 66% of foreign visitors to the Bay Area use SFO and contribute more than $4 billion to the regional economy.

"Airport production and economic development go hand in hand," said Dennis Conaghan, San Francisco Center for Economic Development Executive Director. "SFO has done a great job of shouldering a lot of the post 9-11 economic pressures by attracting new airlines, and updating security systems and internet technology."

SFO reports that although domestic traffic is increasing faster than the national average, it is still 12 percent less than 2000 levels. However, an increase in airport improvements should narrow that gap. SFO now offers a full-service European spa, airport-wide wi-fi, and a brand new food and beverage program in domestic terminals. Also, USA Today recently reported that SFO has the shortest wait time at security checkpoints of major airports in the U.S., perhaps due to its new baggage screening system.

Partnerships with the SFCED, the SF Convention, Visitors Bureau, the Chamber of Commerce, and the Mayor's Office have led to increased airline expansion and economic success. According to the Bay Area Economic Forum study by Martin Associates, adding one new domestic airline with 10 flights per day and 150 passengers would likely generate up to 3,891 jobs, $146,905,000 in annual wage and salary income, $241,077,000 in annual business revenue, and $23,913,000 in state and local taxes, totaling $411,895,000 in annual revenue growth. With the arrival of eight new airlines and more to follow, SFO adds billions of dollars and more financial stability to the recovering Bay Area economy.

For more information on the SFCED or any of the items mentioned above, please contact info@sfced.org.