S.F. job explosion strains supply of housing, offices
The Bay Area has added an estimated 400,000 jobs in the past four years — almost 40 percent of the 1.1 million total regional planners had predicted would be added by 2040.
The strongest growth, according to the Bay Area Council, has been in construction, information (tech), professional and business services, and leisure and hospitality.
Venture capital investment in 2014 was the highest it has been since 2001 — with Uber leading the way at $1.2 billion, Airbnb at $500 million, Lyft at $250 million, Pure Storage (all-flash enterprise storage) at $225 million and Pinterest with $200 million.
Almost a quarter of the jobs were added in San
Francisco — a surge that helps explain the strain on the city’s housing and transportation.
Still, according to San Francisco Chamber of Commerce Vice President Jim Lazarus, the city’s workforce only recently surpassed its 600,000 all-time high, after an exodus of jobs in the past 14 years caused the number to dip as low as 510,000.
Part of the reason is a pent-up demand for construction after the recession, which put the brakes on most building projects, Lazarus said.
Slowing down the city
Whether the city can — or wants — to keep pace is the question.
Of the estimated 90,000 new jobs in San Francisco in the past four years, about 50,000 are believed to be have been office hires. That’s more than 12,000 a year, or two to three times the annual number that can be accommodated under Proposition M. That 1986 law limits new office development in the city to 875,000 square feet a year, which is enough space for about 4,000 to 6,000 workers.
Commercial real estate brokers estimate the job burst has pushed San Francisco office vacancy rates below 8 percent, creating concerns that some companies may move elsewhere.
“It’s going to slow down in the city — not because people don’t want to come here, but because there is no more space,” said the city’s chief economist, Ted Egan.
In fact, Egan said, it’s already happening. After three consecutive years of 5 to 6 percent job growth, it dropped in 2014 to about 3 percent, with many jobs now being created in Oakland and beyond.
Gina Simi, spokeswoman for the City Planning Department, said the city still has the equivalent of almost eight Transamerica Pyramids under construction or in the pipeline.
But longtime housing activist Calvin Welch warns that the crush of new workers — consigned on average to only about half the office space they had back in the 1970s and early ’80s — already is creating a “transit and affordable-housing tsunami.”
“And I think there is going to be great pushback,” he said.
One of those doing the pushing is left-leaning Supervisor John Avalos, who worries that too many jobs are being created for highly skilled workers, creating a shortage of opportunities for “middle-class and working-class San Franciscans,” who might have to leave the city.
“We haven’t cracked that nut,” he said.
Whatever the case, the regional job growth in the past four years has put the Bay Area on track to reach the 30-year total predicted by the Association of Bay Area Governments and the regional Metropolitan Transportation Commission within the next decade.
Officials from the two agencies said the earlier estimates were based on long-term job patterns in the Bay Area. The report really is more of a tool to help local agencies making decisions about investing in housing and transportation.
‘Correction’ needed
And while growth is going gangbusters today, the report is about the long-term picture.
“I’d be very surprised if (regional job growth) didn’t slow down,” said Cynthia Kroll, chief economist with the Association of Bay Area Governments.
Kroll may have a point, given the two job slumps in the past 15 years — first the 2001 dot-com bust, then the 2007-10 recession.
“Within the next seven years, we are certainly going to see some kind of correction,” said Tracey Grose, vice president of the job-promoting Bay Area Council Economic Institute. “How big it is, I can’t tell you.”