’Tis the season for year-end economic statistical reports and projections. And in consecutive Examiner front-page stories last Thursday and Friday, headlines trumpeted that San Francisco is on the “path to recovery” while adjacent San Mateo County is “on the mend,” according to the official 2006 municipal wrap-ups.
Both counties have now tallied two consecutive years of rising economic tides, indicating a steady if not-quite-spectacular climb back to the heady days of circa-2000 Bay Area prior to Sept. 11 and the dot-com bust.
In San Mateo County, the 4 percent unemployment rate is a three-year low, and hotel tax revenues are at a three-year high. Property tax revenues have grown 36 percent in three years, and the 17 percent vacancy rate in commercial real estate ias the lowest in five years. Average personal income grew from $52,103 to $54,807 during 2004, the latest figure available.
Meanwhile, San Francisco is showing healthy improvement in job growth, the all-important tourism revenues and commercial office occupancy. In mid-2003, the office vacancy rate hit an all-time high of 23 percent, while in this year’s third quarter the vacancy rate was down by more than 10 points.
This lower office vacancy rate indicates that San Francisco’s not-yet-tallied 2006 job total will show a second consecutive annual gain. During 2005, The City added 6,300 new jobs, mostly in the professional and business services sectors. This is pleasant news, but it must be seen in the context that San Francisco lost a total of 100,000 jobs between 2000 and 2004.
Tourism, San Francisco’s No. 1 industry, has been on an upswing for the last two years. Cruise ships brought 223,000 passengers to The City in 2006, some 100,000 more than docked here in 2003
San Francisco International Airport continues to be a powerful economic engine for both counties. The 33.6 million people flying into SFO in 2006 are about as many as last year. But now the number of international passengers has increased by 4.5 percent, as more people worldwide seem willing to fly again.
Last year, San Francisco saw 15.7 million visitors, a 4 percent boost from 2004. They spent $7.37 billion in The City, a 9.5 percent increase. The 2006 numbers are not compiled yet, but it is encouraging that San Francisco booked 925 conventions during 2004-05 and a heftier 1,035 in 2005-06.
Hotel occupancy rates increased slightly, while average daily room rates went up nearly $15 this year to $167. San Francisco collects 14 percent of all room charges, which brought in $174 million in 2005. Retail sales also improved 7.5 percent in 2006.
San Mateo County hotels, mostly clustered around San Francisco International Airport, have delivered 39 consecutive months of room tax increases. This contributed some $772,000 to county government coffers alone in 2006, as average hotel room prices increased more than 19 percent to $117 a room.
If there is anything resembling a cloud on the horizon for San Francisco and the Peninsula, it is that residential real estate values are starting to flatten. Property taxes provide the lion’s share of San Mateo County’s $371 million total revenue. However, with all these other positive indicators in place, the overall Bay Area trend is looking better than it has in years.