Could the key to the country's economic recovery be starting in San Francisco?
May 17, 2011
Everybody from economists, politicians, business people, to the guy on the street have all been asking when we are going to see a real start to an economic recovery. Most states are seeing some stabilization in the marketplace but a full-fledged recovery that will create job and economic growth in the private sector is still somewhere in the future. The government has, through their massive bailouts and government hiring programs, created new jobs but the private sector is still at a stand still.
In order for our national economy to grow we need to see a recovery in one of the larger sectors that is substantial enough to create a wave of new business opportunity. In the last cycle recovery was lead by a residential real estate boom through liberal financing opportunities. People seem to forget that after 9/11 we were not only hit by the largest terrorist act in the history of our country, but also tossed into a recession and a deep one at that. By fostering a housing building boom we were successful in getting out of that recession and created a sustainable recovery.
Prior to the recession of 2001 we experienced an economic boom like no other: The Internet boom. San Francisco was the original home of the Internet boom which lead to the major expansion of The Silicon Valley. This expansion built the necessary hardware to support the creation of the World Wide Web in San Francisco, which lead to further expansion throughout the country.
Today 'tech' is back and growing in San Francisco. Social networking firm-Twitter, gaming company-Zenga, database service-Salesforce and mobile application firms such as Lockout, all call San Francisco their home and their flagship location.
In San Francisco our office vacancy factor has gone from a high of 19% in the deep part of this recession to a low 6.7% and is falling fast. Residential vacancy rates have dropped from 9% from 3%. As a result, Silicon Valley is now seeing resurgence and their vacancy rate of over 25% is starting to drop dramatically. Let's hope the rest of the country is next in line.
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Written by: Hans Hansson
Hans Hansson is President of Starboard TCN Worldwide Real Estate Services as well as a member of the Board of Directors for TCN Worldwide Real Estate. Hans has been an active broker for over 26 years in the San Francisco Bay Area and specializes in office leasing and investments. If you have any questions or comments please email firstname.lastname@example.org or call him at (415) 765-6897. You may also check out his website, http://www.commercialspacefinder.com/.