Will San Francisco’s Economy Soar in 2019?
Since emerging from the Great Recession nearly a decade ago, the San Francisco economy and rental housing market have been among the nation’s strongest. The region’s bustling tech sector and still-strong finance and banking sector have bolstered record-level employment and household growth. In spite of this expansion, job growth started to moderate four years ago, partly due to a lack of qualified workers for certain highly skilled positions in San Francisco, San Mateo and Santa Clara counties.
Tech Stalwarts Stand Tall in San Francisco
In spite of recent volatility among some companies in the tech industry, such as Facebook and Apple, the tech sector continues to perform well overall. Google shares have steadily risen over the years, and the company has benefited from a spike in Internet advertising revenue, which rose by 21% in 2017 to $88 billion.
Salesforce continues to expand, now employing 8,000 people in San Francisco. The company’s breakneck hiring pace in 2017 will likely put it ahead of Wells Fargo as San Francisco’s leading employer. Uber has also hired aggressively, increasing its local headcount to 5,000 in January 2018. Other tech companies that have been growing rapidly include Lyft, Dropbox, Affirm and AirBnB.
The Financial Services Sector Has Fully Recovered
Although Wells Fargo and Charles Schwab have had some recent setbacks in years, companies in the financial services sector have overall steadily recovered from the subprime mortgage crisis 10 years ago. According to CoStar, the sector stands at 102% of its pre-recession peak.
Altogether, total non-farm employment in San Francisco has risen to 125% of its pre-recession peak, with office-using employment growing to 133% of its pre-recession peak as of the third quarter of 2018. Employment in high- tech jobs has more than doubled in the expansion period lifting the entire economy, though the pace of job growth in tech has also slowed.
Large Apartment Developments Dominate
San Francisco’s construction boom continues to mature. Since the Great Recession ended a decade ago, more than 100 high- and mid-rise rental properties containing some 17,000 units have been delivered. Most of these properties contain more than 100 units each. Since the beginning of 2015 alone, 10,000 units came to market, and another roughly 7,000 units are currently under construction. The new inventory has been well received: Most properties lease-up within a year of completion. However, a number of property owners offered tenant concessions to boost occupancy.
Which neighborhoods are seeing the highest levels of construction? Download the State of MYND San Francisco report to find out.