Quote:
Originally Posted by compactspace
SF is booming right now because of tech. Whether you roll San Jose in or not, it's still tech town and tech is big business.
Right now, talented people are flocking to SF to get a piece of the action. It's like a white collar gold rush. People all over the world know of Apple, Google and Facebook, even if they don't know that these companies have anything to do with San Francisco.
It would be madness to put SF anywhere but in the top five... right now. It's probably fourth after NYC, DC and LA.
Over the long term it's an entirely different question. The city is squandering the tech boom. Much of the private wealth the boom is generating is being eaten by housing, which is inflated because of artificial supply constraints.
Worse, the city is dancing around the edges of expensive infrastructure upgrades without really getting stuck in. If it was better managed, the city would annex -- or at least align with -- its neighboring councils and build a world-class subway system to serve its residents. It would be increasing population density through sensible housing policy. It'd be trying to diversify its economy to prepare for the boom's decline. And finally, it would be dealing with the horrendous homelessness and poverty within its borders while it has money sloshing around its economy.
If it stays on its current trajectory, I'd say it'll drop out of the top five once the boom is over. Probably well out. The Ivy MBAs swarming over it will go back to Connecticut, or onto the next boomtown. It'll go back to being a sleepy little city with an interesting history and a very liberal culture.
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^^^You raise stereotypically partially true points.
For instance, housing prices and general cost of living for anything in the Bay Area eats up that wealth creation. Moreso now than in New York, for instance, however, the same can be said for New York. Before San Francisco's extreme inflation as of late, everyone always joked about living in a shoebox in New York and $100k salaries being for poor people because of the cost of living there. And yet, New York consistently does fine. San Francisco has
never been cheap, and not even adjusted for inflation was almost as expensive in the Gold Rush days as it is now (i.e. think 2015 SF USD for things back in 1850, which is utterly insane).
You also fail to realize that San Francisco's culture, which quite frankly includes the homelessness, is very different from the rest of the country in some respects. And it's the inclusiveness, openness, and "liberal"/collaborative (I'd say more laissez faire/libertarian) nature embedded in the culture that sets SF apart, makes it desirable, and allows tech and creative modern industries and scientific fields to flourish in the area moreso than they could anywhere else.
"Sleepy" little town is relative. SF is the second densest major city in America and serves a region of 8 million people...really more like 12 million since it is the "hub" of NorCal. If there is a tech downturn, this will still hold true. Immigration and tourism are large components of the area and the city. San Francisco itself receives about the same level of net immigration as much larger Chicago. Combine SF and SJ and you're looking at the 4th largest region in the country behind NYC, LA, and Miami for net immigration, just ahead of DC and well ahead of Boston/Chicago and of course the rest. In terms of international tourism, again, we're talking a major city that sees over 3 million international tourists a year, compared with LA's 3.8 million, Orlando's 3.7 million, Miami's 4 million, and New York's 9.6 million. SF has more international tourism than LV and Honolulu, and has nearly twice as much as the next traditional city - DC, which has 1.7 million international tourists. So this is a HUGE piece of both the vibrancy of the city and its economy, that is mutually exclusive from tech.
This is certainly not the first time SF has boomed, nor is it remotely the first time tech has boomed in the area...though it's the first time tech has boomed *in the city limits itself*, which in my opinion is a very good thing to the sustainability of tech in the region. It clearly indicates that despite what everyone thinks, as tech matures and changes with time, with sub-sets of "tech" that develop, so too does the Bay Area and the employment scene in the area. Different facets of tech have set up shop ALL ACROSS the Bay Area, including in the E Bay.
In fact,as a percentage of the Bay Area employment, due to loss of tech manufacturing and maturation of the industry towards income-producing online businesses (which was the premature goal of the late 90s anyway), tech sector employment in the entire Bay Area is 19%, down from 21% during Dot-Com peak. Absolute employment numbers are also down, still, from that peak.
Bay Area nears record levels of employment - San Jose Mercury News
In SF, that number has risen from 4% in 1990 to 13-14% today, so it's a large number.
Top Analysts Predict Another Year of Growth for SF Economy | SPUR
But one has to consider other facts - we're talking today of much lower leverage, fewer IPOs and more stringent standards for public fundraising, and a lot of risk remains on the private equity side rather than either the debt or public markets side. An absolute crash in tech today would look radically different from that of 2001, all things the same. But all things aren't the same - many of the now public tech firms are legitimate operating businesses. Big blue chips like Google, Facebook, and Apple aren't going anywhere, and companies like Twitter and Uber are well on their way to joining those ranks. The fact that Uber is mentioned really goes to show the diversity of tech these days, and that these are businesses with lots of income. Not just ideas.
Regarding employment outside of tech, the Bay Area is right basically alongside Boston as the world's biotech/life sciences hub. In fact, Boston has more mature companies with a presence there, and they acquire Bay Area companies, but the Bay Area receives the highest amount of biotech VC funding and is a robust research center that won't go away if tech downturns, necessarily. People discount how big biotech is in the Bay Area, and frankly other fields of sciences, as well. People talk about the "Google" buses, but companies like Genentech also have their buses picking up workers from SF and bringing them down or over to the labs.
And unlike LA or DC that are leaders in really one, maybe two industries, SF is a big time leader across a multitude, including still finance.
SF still has a huge financial sector that has seen tapered losses in employment since its peak relative to New York's financial sector. Bay Area is HQ for following firms:
#3 Chevron (oil)
#5 Apple (tech, not going anywhere in tech downturn)
#15 McKesson (pharma/distributor)
#17 HP (tech)
#29 Wells Fargo (finance)
#46 Google (tech, not going anywhere in tech downturn)
#53 Intel (tech)
#55 Cisco (tech)
#67 Safeway (retailer/grocery)
#69 Ingram Micro (tech manufacturing)
#82 Oracle (tech)
#154 Amgen (biotech)
#178 The Gap, Inc (retailer)
#180 Ebay (tech)
#183 PG&E (energy/utility)
#238 VISA (finance)
#250 Gilead (biotech)
#256 URS (engineering...acquired by LA based AECOM in late 2014)
#260 Synnex Corp (services)
#277 ROSS Stores (retail)
#337 Franklin Templeton (finance)
#341 Facebook (tech, not going anywhere)
#346 Core-Mark (packaging)
#350 Applied Materials (manufacturing)
#378 Symantec Corporation (tech)
#384 Agilent Technologies (biotech/manufacturing)
#411 NetApp (tech, cloud storage)
#422 SanDisk Corporation (tech, manufacture)
#432 Sanmina Corp (manufacturing)
#451 Clorox (consumers)
#459 Charles Schwab (finance)
#474 Advanced Micro Devices (tech, manufacture)
32 in F500 (13-14 related to the broad idea that is "tech")
#521 Levi Strauss (retail)
#522 Yahoo! (tech, not going anywhere)
#523 Juniper Networks (tech, manufacture)
#544 Intuit (tech, not going anywhere so long as people need to do taxes)
#560 William-Sonoma (retail)
#563 Netflix (tech, entertainment)
#577 Robert Half International (staffing)
#589 NVidia (tech, manufacturing)
#599 Salesforce (tech services)
#601 Adobe Systems (tech)
#619 Del Monte Foods (consumer/food)
#620 Electronic Arts (tech, gaming)
...
Forbes list of largest private companies:
#4 Bechtel (engineering)
#120 E&J Gallo Winery (seems random)
#153 Wilbur-Ellis (agri, distribution)
#184 DPR Construction
Some other things not going away in a tech downturn:
Universities: Stanford, Berkeley, UCSF, Penn's W Coast campus, CMU's W Coast campus, UC Hastings, SFU, SFSU, all of the prestigious art universities that fuel the city's arts and fashion scene, etc etc
Billionaires and people with vested interest: #2 region behind NYC metro for people of $$$$ and combine that with CA politics and easily and forever a top 5 if not 3 or 4 region for people with power/influence
Foreign trade: Top 5/6 port in the US with Port of Oakland though that might slip with latest strike
Mild Weather
Access to world class outdoor amenities (Yosemite, Tahoe, Redwoods, Big Sur all just a short step away)
Intelligent population looking to solve problems
There's just no way that the Bay Area is NOT a top 5 most important region in the country. It serves an important role across *many* industries, ranging from Entertainment to energy. It's politically quite important. It's financially quite important. And it has lots of attributes that just can't be replicated elsewhere.
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