May/June 2012

Unemployment

Bay Area unemployment rates decreased significantly between March and April 2012, while statewide rates fell one percentage point and the national rate remained relatively stable.

Among Bay Area Counties, Solano and Sonoma Counties experienced the largest decreases in unemployment - both down .9 percentage points from March. Six of the area's nine counties rank among California's 10 best for employment. Among these, San Francisco ties Orange for the thirs-lowest unemployment rate (7.4 percent), San Mateo has the second-lowest (6.8 percent) and Marin the lowest (6.4 percent).

Source: Bureau of Labor Statistics

Housing

Foreclosure Activity

Source: DQ News

The number of California homes entering foreclosure decreased to its lowest level in nearly five years - largely as a result of the improving economy and policies that favor short sales. This trend extends to the Bay Area, where foreclosures declined in all nine counties between Q1 2011 and Q1 2012.

Notices of Defaults were down 17.6 percent over Q1 of last year. The majority of loans currently going into default originated during the 2005-2007 period, with their median date origination in the third-quarter of 2006. Mortgages were least likely to default in Marin, San Francisco, and San Mateo counties. They were most likely to default in Tulare, Sacramento, and San Joaquin counties.

Housing Construction

Housing construction in San Francisco fell to a 20-year-low during 2011. Despite growing demand, and prices that continue to rise, the addition of new units lagged. According to the Mayor’s Office of Housing, this is due in part to decisions made three or even four years ago, when the housing market crashed. For the next year, however, some large scale projects are in the pipeline - including condominiums in Mission Bay and Downtown.

Office Market

Real estate investment services firm Marcus & Millichap named San Francisco the U.S.’s top-performing office market—followed by New York City and Houston—in their National Office Property Index, based on factors including vacancies, job growth and projected rents. According to Colliers International's first-quarter office report for San Francisco, Class A rental rates in the city averaged $48.87 per square foot, up from $44.56 in Q4 2011.
Demand and rent growth are largely fueled by San Francisco's bustling tech sector—specifically, social media, search engine and cloud computing companies such as Airbnb, Yammer and Zoosk who signed major deals in April 2012. Tenants touring San Francisco from out of town (mostly technology tenants from the South Bay) have doubled since the beginning of 2012, and technology companies are responsible for 45% of all new tenants.
The demand for scarce Class A space remains strong, particularly in the South of Market submarket with recent spillovers to the traditional North of Market area and west into the newly created Central Market Street incentive zone. For now all indicators suggest a continuation of the growth experienced in 2011.

SFO - Summer Forecast Predicts Record-Setting 2012

California International Trade 2011

California continues as a leading center for foreign trade. Some interesting factors about the robust sector from the Governor's Office of Business and Economic Development:

• California is the No.1 State for attracting foreign direct investment.

• California's export shipments in 2011 totaled $159.4 billion - a 25% increase over 2009 - and returned the state's export totals to pre-recession levels.

• California's largest export market was Mexico, with exports of $26.04 billion in 2011. Other top markets include Canada ($17.2 billion), China ($14.2 billion), Japan ($13.1 billion), and South Korea ($13.1 billion).

• Computers and electronic products lead California exports in 2011, accounting for $46 billion alone. Other top exports were transportation equipment ($15 billion) and machinery ($15 billion).

• Top 5 metropolitan areas in California in merchandise exports in 2012:
  1. Los Angeles-Long Beach-Santa Ana ($79.8 billion)
  2. San Francisco-Oakland-Fremont ($31.8 billion)
  3. San Jose-Sunnyvale-Santa Clara ($22.8 billion)
  4. San Diego-Carlsbad-San Marcos ($16 billion)
  5. Riverside-San Bernardino- Ontario ($10.9 billion)

Source: California Governor's Office of Business and Economic Development (GO-Biz).

QuickFacts is produced by the San Francisco Center for Economic Development (www.sfced.org). For more information please contact:

Dennis Conaghan
Executive Director
415.352.8819
Email: dconaghan@sfced.org
www.sfced.org