As the year draws to a close, San Francisco’s local economy has shown improvement for the second consecutive year, suggesting that The City is on an economic upswing after years of sluggishness, according to data compiled by the Mayor’s Office of Economic and Workforce Development.
In 2005, San Francisco’s local economy showed improvement with its first net gain of jobs, a boost in the number of visitors and a decline in the office vacancy rate.
The latest economic statistics for 2006 indicate San Francisco is moving further toward a healthier local economy.
The numbers are “telling the story that we continue to beon a path to recovery,” said Kurt Fuchs, project manager with the Mayor’s Office of Economic and Workforce Development, who also drafts for Newsom a monthly report tracking economic statistics.
Last year, San Francisco saw a net gain of 6,300 new jobs, mostly in the professional and business services sector. Between 2000 and 2004, San Francisco lost a total of 100,000 jobs. “We had been in a slump and we are turning things around,” Fuchs said.
Although the 2006 job tally won’t be out until next year, Fuchs expects a job increase, especially since the office vacancy rate is lower. In the second quarter of 2003, the vacancy rate hit an all-time high of 23 percent, while in this year’s third quarter the vacancy rate was at 13.3 percent.
Tourism, The City’s No. 1 industry, has also fared well in the past two years. Cruise ship business has brought 223,000 passengers to The City in 2006, whereas three years ago, 137,000 passengers arrived on cruises, according to Fuchs. Despite the increase in passengers, fewer cruise ships docked at city piers this year, 81 compared with 84 in 2005, Fuchs said.
The number of people flying into San Francisco International Airport remains on par with last year, but the number of international passengers has increased by 4.5 percent.
Hotel occupancy rates have increased slightly, while the average daily rates have gone up from $153.93 last year to $167.33 this year, boding well for The City’s operating budget. San Francisco collects 14 percent of all room charges, which brought in $174 million in hotel taxes in 2005.
Last year, San Francisco saw 15.7 million visitors, 4.1 percent more compared with 2004, and they spent $7.37 billion in The City, a 9.5 percent increase. The 2006 numbers are not compiled yet, but other data suggests a similar or better performance this year. The bureau booked 925 convention groups during fiscal year 2004-05 and 1,035 convention groups in fiscal year 2005-06 for the upcoming years.
Retail sales have also improved steadily in 2006, with an increase of 7.5 percent between the second quarter of 2005 and 2006.
“This has been a very strong year for us,” said Laurie Armstrong, spokeswoman for the San Francisco Convention and Visitors Bureau. “We’re feeling very positive about 2006 and we’re optimistic about 2007.” Put simply, “People are traveling more and spending,” Armstrong said.