Eric Von Berg - Newmark Realty Capital - 595 Market Street, Suite 2550, San Francisco, CA 94105 - for loan quote: 415 956 9922

November 26, 2013

2013 Bay Area Economic Engine - Creative Destruction

Here again is my annual assessment of the Bay Area's Economic Engine.  Feel free to download it for your own use... and as always feel free to call or write me with questions or comments!

Warning... data alone does not tell the whole story

If you just look at the data, you might see the recent boom in San Francisco and Silicon Valley has slowed slightly; the Bay Area added 52,000 jobs in the 12 months ending October 31st, 2013, compared to 99,000 in calendar year 2012.

I predicted this "slowdown" in last year’s Bay Area Economic Engine. Here's what I wrote then:

Much of the 2010-2012 surge in employment and demand for space was due to companies with disruptive technologies… As these innovations gain market they replace something else. In 2010-2012 these winning companies were launching and growing while the losing companies were still in place. Now we are beginning to see the fallout from the disruptive technologies; upcoming layoffs being announced for chip manufacturers, network equipment manufacturers, PC’s, console video game companies and companies that produced products made redundant by the smartphone…

And so it was... 2013 saw major layoffs... HP 28,000, Cisco 4,000, Lockheed 4000, EMC 1,000, Electronic Arts 900, Symantec 800. But the magic of the Bay Area tech culture is “creative destruction”… Google moves into 500,000 sf of space at the old Mayfield Mall in Mountain View last occupied by HP. Oracle buys and decimates Siebel Systems and that San Mateo space becomes a 1,000,000 sf campus for Sony’s PlayStation group.

Watch corporate IT spending and know the health of Silicon Valley?

Not true this year... 2013 proved this adage to be wrong. With corporate IT spending flat, cuts in defense spending, sequestration, personal computer sales falling, Intel missing the tablet market and computer gaming companies suffering, you might expect Silicon Valley to be on its rear.

Emerging technologies more than compensated... smart phones, tablets, social networking, cloud computing, the consumerization of IT .... these technology trends are still in their infancy and are all are growing up in the Bay Area.

What does that mean for the Bay Area?  The headwinds we saw last year are largely behind us and with the overall US economy recovering; our Bay Area Tech Boom may just be beginning.

DOWNLOAD the 2013 Bay Area Economic Engine by clicking here