“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

Oct. 31 (Source: By George Avalos, Contra Costa Times, Walnut Creek, Calif.) - High-tech job growth has sparked the Bay Area’s rebound from the recession, but experts warn that the region’s economy could stall unless other industries start to hire.Over the first nine months of 2011, the technology industry added 26,200 workers, 65 percent of all the jobs created in the Bay Area, this newspaper’s analysis of data compiled by state officials and Beacon Economics shows. High-tech jobs account for 18 percent of the Bay Area’s workforce.

“If the Bay Area jobs recovery doesn’t broaden, it is in danger of fizzling out completely,” said Scott Anderson, senior economist with Wells Fargo Bank.

The key, according to a number of economists, would be a recovery in the long-troubled housing industry.

“We need a normal housing market,” said Jeffrey Michael, director of the Business Forecasting Center at University of the Pacific in Stockton. “We have to have a construction industry that has a pulse.”

Much in the way the financial industry bolsters New York City’s economy, real estate is an economic bulwark for the Bay Area. Real estate and high-tech produce strong ripple effects throughout the economy, creating many jobs in many industries.

“Technology workers are more likely to buy a home, make home improvements or go to the spa,” said Jon Haveman, chief economist with the Bay Area Council’s Economic Institute. “They will dine out more often. They spend more at the mall.”

Much the same is true with the

housing industry. Rising demand spurs construction of new homes and apartments. Newly purchased houses are filled with furniture, often new. Backyards receive upgrades, with the help of frequent trips to the hardware store or garden supply shop. Mortgage providers hire loan agents. Commissions for real estate agents swell. Those virtuous cycles vanished when the housing bubble popped.

The employment gains in the Bay Area housing sector during the peak year of 2005, compared with now, illustrate the problem. In the first nine months of 2011, Bay Area construction companies added 3,200 jobs. Over the first nine months of 2005, construction gained 4,700 jobs. The difference is akin to a Solyndra solar plant. The contrast is even starker in the finance, insurance and real estate sectors, which have numerous jobs linked to housing. In the first nine months of 2011, Bay Area financial businesses shed 1,500 jobs. During the same nine months of 2005, financial companies added 3,100 jobs. That 4,600-job swing equates to a NUMMI factory.

“We don’t need construction to go all the way back to the 2005 levels,” Michael said. “But it has to get off the floor, to improve from these abnormally low levels.”

For now, the thousands of new jobs in construction are a welcome sign.

“Things are looking a little better,” Brent Judd, a project supervisor for Tilton Pacific, said of local construction activity. “It’s not dramatic. But things have stabilized.”

Tilton Pacific is the general contractor for a new shopping center in Pleasanton that will be anchored by a big Safeway store. Joining construction in the upswing are transportation and warehousing, which gained 9,500 jobs, and retail, which added 2,300 jobs. Even the battered manufacturing sector rose by 3,900 jobs.

“We are hiring people all the time,” said Nathan Tyson, an engineer at Chevron’s refinery in Richmond.

He started a few years ago as a tank turnaround engineer for the Richmond refinery. He now works as a design engineer at the plant.

The improvement in retail is significant because it reflects a stronger job market in other sectors. If residents are working, they are more likely to shop. New entrants into the supermarket sector, coupled with Safeway’s store expansions and revamps, also may have spurred some hiring.

Fresh Easy and Sprouts Farmers Markets have been opening new stores. REI opened a new store in Dublin. Auto dealers have been growing. Whole Foods and Sunflower Farmers Markets have announced, or recently opened, new stores in the Bay Area.

Safeway held a jobs fair recently for its new Pleasanton store. The supermarket estimated that 600 people showed up in person and 1,000 applied online.

“We ended up hiring 240 employees,” said Susan Houghton, a spokeswoman for Safeway.

Despite the hopeful signs, weaknesses persist in the Bay Area — meaning it will take years to fully recover. Arts and entertainment, hotels and dining and beverage establishments, along with government, have shed jobs lately.

“It’s going to take a certain amount of time to bleed off the excess debt in the economy because of the credit and housing bubbles,” said Michael Yoshikami, chief investment officer with Walnut Creek-based YCMNet. “We won’t see a meaningful jobs rebound for a few years.”

Contact George Avalos at 925-977-8477. Follow him at twitter.com/george_avalos.

___

(c)2011 the Contra Costa Times (Walnut Creek, Calif.)

Visit the Contra Costa Times (Walnut Creek, Calif.) at www.contracostatimes.com

Distributed by MCT Information Services

A service of YellowBrix, Inc. Publication date: 2011-10-31

Source: By George Avalos, Contra Costa Times, Walnut Creek, Calif.

Article source: http://www.loansafe.org/bay-area-economy-could-fizzle-if-recovery-fails-to-broaden-beyond-high-tech-industry