“You folks will continue to outperform the U.S. economy and all of California,” predicts Wells Fargo’s chief economist, John Silvia.

Of course, prognosticators can be wrong. Many had predicted the state’s unemployment rate, for example, would continue in double digits through 2013. In fact, unemployment dipped below 10 percent last month for the first time in four years and continued to fall even further in the Bay Area. And job growth numbers were led by industries such as transportation, construction and leisure and hospitality, rather than high tech, which has almost single-handedly powered the local economy.

Stephen Levy, director of the Center for Continuing Study of the California Economy, said: “2013 will be the year the recovery becomes real to many more people, not just for those in the tech sector. I don’t see that abating.”

Neither does Jon Haveman, chief economist at the business-oriented Bay Area Council. “It’s a dynamic time. There’s an intense march to occupy vacant space in San Francisco. Silicon Valley and the mid-Peninsula are very hot, and there’s a real uptick in the East Bay.”

Cascade of construction

The evidence is not hard to find. A phalanx of construction cranes from Rincon Hill to upper Market Street. At Mission and Fremont streets, Los Angeles’ Kilroy Realty Trust is building a 27-story tower for Salesforce.com. Kilroy is building 560,000 square feet of space in Sunnyvale for LinkedIn, one of a slew of new projects in Silicon Valley. In the East Bay, work begins in 2013 on the $1 billion transformation of the old Oakland Army Base into a regional shipping and logistics center.

Much of the development and its economic effects continue to be driven by the tech sector, of course. According to a recent Bay Area Council analysis, every new tech job creates four jobs in other areas. “Tech has terrific spillovers,” Haveman said.

It’s also transforming the skyline of San Francisco. By December 2013, New York’s Tishman Speyer Properties will have completed construction of a 10-story, 286,000-square-foot office building on what was a vacant parking lot at Howard and First streets. The first new office building in San Francisco since 2007, the Foundry Square development is designed to meet “tech tenant demands and needs perfectly,” the managing director of Tishman Speyer’s San Francisco office e-mailed real estate brokers this year.

Along with a partner, JPMorgan Chase Asset Management, Tishman Speyer is looking to break ground next year on a 26-story, 450,000-square-foot office building one block away at 222 Second St. A block south, construction begins early in the new year on two condo complex towers, of 38 and 43 stories, at 201 Folsom St.

“The market is very strong,” said Jeffrey Heller, president of Heller Manus Architects, which did design work on 201 Folsom. Another Heller Manus project, a 54-story office and residential tower at 181 Fremont St., in the Transbay Transit Center development area, got the go-ahead from the Planning Commission last month.

“It’s going to be a pretty heady year,” said Alan Mark, whose San Francisco firm specializes in condominium research and consultancy. “Multiple offers will be even more intense as the economy continues to recover,” he said, referring to the comparative scarcity in the residential real estate market.

Micro-apartments coming

Apart from the 4,200 new, mostly rental units coming on the San Francisco market beginning in 2013, the first batch of 220-square-foot micro-apartments could begin construction as early as the spring, said Patrick Kennedy, whose company, Panoramic Interests in Berkeley, is building the 11-story, 160-unit complex at Ninth and Mission streets, half a block from Twitter’s Market Street headquarters.

“I’d like to build 10,000 of these in San Francisco,” said Kennedy, who recently completed work on a four-story, 23-unit building of rentals occupying 285 square feet, slightly larger than micro-apartments, in an alley off gritty Sixth Street. They start leasing in January.

“They’re ideal for single creatives, and they help the wider economy. A small, cheaper apartment encourages them to spend more time and money outside,” he said.

Revitalizing Mid-Market

These and other real estate developments, primarily in the South of Market and Mid-Market areas of San Francisco, “are laying the groundwork for the retail trend that will take center stage in San Francisco over the next couple of years – the revitalization of the long-blighted area of Market Street between 6th and 9th streets,” according to a 2013 forecast to be released next month by Cassidy Turley, a commercial real estate consultancy.

The report notes that San Francisco already has the lowest shopping center vacancy rate (4 percent) in the country, and it is likely to fall further in 2013. With the number of new retail openings in the East Bay – for example, the Paragon Outlet center in Livermore last month, and Target’s plans to open a 140,000-square-foot store in Alameda in October – the area also ranks “within the top 10 U.S. markets for retail development,” the report says.

“Many retailers who typically look first to Manhattan for flagship locations are increasingly skipping the Big Apple and looking to the West Coast instead,” the report stated.

Lots of tourists and business travelers will also be looking to these environs. Apart from a “few small holes,” the refurbished Moscone Center is fully booked for 2013, and if 2012 was a record for visitors to the Bay Area, 2013 is shaping up even better, said Joe D’Alessandro, president of San Francisco Travel.

Then there are specific attractions, from the lights on the new Bay Bridge to the opening of the redesigned Exploratorium at Pier 15, the World Baseball Classic at ATT Park and, of course, the America’s Cup. Expect more visitors from Europe and Asia with new nonstops from Shanghai, Paris, Copenhagen and Taipei, Taiwan, to San Francisco International Airport, bringing 2,000 more passengers in daily.

“San Francisco is going to be a place to be in 2013,” D’Alessandro said. “So long as the economy holds.”

Yes, there is the “fiscal cliff,” which, as of the weekend, the country seemed more likely to topple over. A Bay Area Council survey last week found the majority of 400 senior executives and economic development officials thought that investment and hiring was already slowing because of fears of tax increases and spending cuts.

Looking to Washington

More immediately, 400,000 Californians will lose unemployment benefits next month if a deal isn’t reached by Dec. 31, according to the state Employment Development Department.

“It’s not like all of a sudden the economy will plunge into recession. And Washington has time to fix things before it gets serious,” Haveman said. “All the same, Armageddon is a possibility.

“The Bay Area, with all its economic energy, won’t be hit as bad as the rest of the nation, but growth will slow dramatically.”

Andrew S. Ross is a San Francisco Chronicle columnist. E-mail: bottomline@sfchronicle.com Blog: www.sfgate.com/ columns/bottomline Twitter: @andrewsross Facebook: sfg.ly/doACKM

Article source: http://www.sfgate.com/business/bottomline/article/Bay-Area-economy-looking-bright-for-2013-4142769.php

The company said it has acquired a 0.43 acre, fully entitled development site at 350 Mission Street, a premier location situated at the main entrance of the City’s new transit station for approximately $52 million. KRC expects to invest an additional $200 million developing a high-image glass office tower with floor-to-ceiling windows providing abundant natural light, column-free floor plates offering open-office high-ceiling layouts, and ultra-energy-efficient operating systems—all qualities that are sought after by today’s modern office user.

The Skidmore, Owings Merrill LLP (SOM) design focuses on the creation of an urban living room that is highly engaged with the City’s urban realm animated by a café, a restaurant, and a digital canvas. It reflects state-of-the-art sustainability practices and energy-usage standards which are targeted to earn the building LEED Platinum certification—the first ground-up commercial development property in San Francisco to do so. The design utilizes numerous innovative technologies with the aim of creating a building with a carbon footprint that will be as close to zero as possible. According to Craig Hartman, FAIA, SOM’s Design Partner, this will be one of the most innovative office use towers in the U.S.

Situated at the corner of Mission and Fremont Streets and immediately across the street from the new Transbay Transit Center, the office tower will offer the convenience, high visibility and urban amenities that are attractive to the city’s technology and media companies as well as traditional space users. KRC said it will heighten the impact of the building’s prominent location with a 50-foot, open air entry lobby featuring a 75×40 foot electronic media display wall—the first of its kind in San Francisco. The new building—designed with a side-core configuration, an all-concrete structure and an under-floor air distribution system—will accommodate the high-density usage and flexible and open interiors preferred by knowledge-based, collaborative workforces. In-building amenities include electric vehicle charging stations, a fitness center with showers and lockers, and a first-class bicycle and storage center.

“It is rare that you get the opportunity to build from scratch a cutting-edge urban work environment in one of the nation’s hottest office markets at a cost-basis that makes it highly attractive relative to existing Class A properties. Also, given that there are very few large contiguous spaces available in the market, we have a great opportunity to pre-lease a substantial portion of the building,” said John Kilroy, Jr., president and chief executive officer of KRC. “We intend to make the most of it—for the City and for our tenants.”

Christopher Roeder, David Churton and Ted Davies of Jones Lang LaSalle have been engaged by the company as the listing brokers for the project. “350 Mission will be a truly iconic project and is a pivotal piece of the revolutionary TransBay area redevelopment plan,” said Christopher Roeder, managing director of Jones Lang LaSalle. “Just as the TransBay transit center, in combination with the BART and Caltrain, will forever change how San Franciscans interpret transportation, I believe 350 Mission will change how we interpret office space in this city.”

About Kilroy Realty Corporation. Kilroy Realty Corporation, a member of the SP Small Cap 600 Index, is a real estate investment trust active in the office and industrial submarkets along the West Coast. For over 60 years, KRC has owned, developed, acquired and managed real estate assets, consisting primarily of Class A real estate properties in the coastal regions of Los Angeles, Orange County, San Diego County, the San Francisco Bay Area and greater Seattle. At June 30, 2012, KRC owned approximately 12.2 million rentable square feet of commercial office space and 3.4 million rentable square feet of industrial space.

Forward-Looking Statements. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on the Company’s current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of the Company’s control. Accordingly, actual performance, results and events may vary materially from those indicated in forward-looking statements, and you should not rely on forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in forward-looking statements, including, among others: risks associated with investment in real estate assets, which are illiquid, and with trends in the real estate industry; significant competition, which may decrease the occupancy and rental rates of properties; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired properties; the availability of cash for distribution and debt service and exposure of risk of default under debt obligations; adverse changes to, or implementations of, applicable laws, regulations or legislation; and the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts. These factors are not exhaustive. For a discussion of additional factors that could materially adversely affect the Company’s business and financial performance, see the factors included under the caption “Risk Factors” in the Company’s annual report on Form 10-K for the year ended December 31, 2011 and its other filings with the Securities and Exchange Commission. All forward-looking statements are based on information that was available, and speak only, as of the date on which they are made. The Company assumes no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent events, new information or otherwise, except to the extent required in connection with ongoing requirements under Federal securities laws.

Article source: http://www.heraldonline.com/2012/10/23/4359597/kilroy-realty-corporation-raises.html