NEWS RELEASE, 11/1/99
In new report, UC Berkeley business professor Ken Rosen gives San Francisco economy an A+
By Mary Corely
BERKELEY-- Since the end of the national recession in the mid-'90s, San Francisco's economy has experienced the strongest employment growth rate of this century, adding nearly 33,000 jobs over a four-year period.
So reports Ken Rosen, professor of real estate and urban economics in the Haas School of Business at the University of California, Berkeley, in a new analysis of the local economy.
"San Francisco's economy will continue to be one of the strongest in the nation for the next few years, growing at an average annual rate of about two percent, or 23,000 jobs, over the next three years," Rosen remarked, chairman of the Fisher Center for Real Estate and Urban Economics. Economic risk in San Francisco is very low, and because of the city's status as a primary business center, the local economy should fare relatively well even in the event of a national downturn.
According to Rosen, growth will be fueled by tourism, a mainstay in the economy, as well as high-paying, fast-growing high technology companies in the multimedia, Internet and software industries. The multimedia industry is an especially dynamic part of the city's economy, and will keep San Francisco on the cutting edge of the new, global knowledge-based economy.
The conversion of military bases for civilian use will also boost private sector jobs in coming years. While banking mergers are resulting in job losses currently, San Francisco will remain the West Coast's most important financial center. As consolidations are completed, finance will once again be one of San Francisco's fastest growing industries.
San Francisco's economy has many things going for it, Rosen says, but the real phenomenon is the continuing metamorphosis of the South of Market (SOMA) area in what is now popularly referred to as "multimedia gulch."
Rosen and his colleagues have recently completed a working paper titled, "The New San Francisco Economy: A Case Study of Multimedia Gulch," which profiles the area's economy. Over 35,000 people are employed in the multimedia industry in San Francisco, continuing the transformation that began in the mid-'80s from a traditional warehouse and distribution area to the dynamic core of San Francisco's 24/7 economy.
"All those bike messengers for whom my friend Rick Holliday built live/work space in the early '90s have grown up and started their own Internet-related multimedia companies," Rosen commented.
The UC Berkeley study reports that a confluence of regional factors fueled this incredible growth: skilled workers and entrepreneurs, the presence of world-renowned research and educational institutions, the availability of suitable, affordable commercial space, an existing technology infrastructure, and favorable quality of life amenities.
"Few, if any other cities, have this mix of favorable assets with which to grow new industries," Rosen observed.
Robust economic conditions are supporting continued strength in the city's real estate market. Home prices in San Francisco continue to appreciate at a rapid rate, along with the rest of the Bay Area. Strong income growth, steady household formation and favorable interest rates have bolstered demand for housing even as prices rise. In the 12 months ending in July 1999, home prices gained a high of nine percent in the San Francisco metropolitan area, representing one of the largest price gains in the country.
In the commercial sector, downtown office vacancy rates are as low as five to seven percent, with the SOMA area expected to match those rates within the next year or two.
Additionally, hotel occupancies are among the highest in the nation and room rates are behind only New York City.
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