East Bay Rising – 2016 Economic Outlook for the East Bay
At the East Bay Economic Development Alliance’s spring membership meeting on May 19, Dr. Christopher Thornberg of Beacon Economics presented his annual economic outlook for the East Bay. The report found that the East Bay economy performed well in 2015, and is expected to continue on its present course through 2016 and 2017. With a high quality of life, relatively affordable real estate, and access to jobs, the East Bay economy experienced accelerated growth compared to 2014. The East Bay is on the rise.
Key points from the presentation included: (click on images to enlarge graphs)
- Employment: The number of jobs in the East Bay continues to increase and the unemployment rate remains low as compared with the state and nation. Between February 2015 and February 2016, the number of workers employed at East Bay companies grew by 2.7% (29,000 jobs), as compared 1.9% growth in the nation during that period. The unemployment rate was 4.3% in February 2016, compared to 5.5% in the state overall. With more affordable commercial real estate and an increasing number of high-skilled workers living in the East Bay, more and more tech companies will be bringing jobs to the area.
- Population: The East Bay’s population grew at one of the fastest paces in over 10 years. From 2014 to 2015, the number of people living in the East Bay increased by 2.1%, now totaling 2.7 million. Growing tech employment in the Bay Area has been an important factor in the population increase. From 2009 to 2014, over 13,000 residents have migrated from San Francisco, San Mateo, and Santa Clara Counties, which have high concentrations of tech jobs.
- Relative Affordability: The East Bay’s relative affordability, particularly as compared to San Francisco and the South Bay, is one of the most important factors contributing to the area’s recent economic success. Residents move to the area for more affordable housing and improved quality of life. Businesses are attracted to the area as an affordable place to expand or relocate and startups want to take advantage of “local synergies.” A local example of this is at The Gate, a manufacturing, tech, and art incubator that attracts tenants from across the region.
- Housing: Dr. Thornberg emphasized that much more housing, for all income levels, is needed to address the current housing crisis. Even though permits for new housing in the East Bay grew by double digits in 2015, the undersupply of housing in the area continues to rapidly drive up prices. Approximately 7,500 housing units were permitted for construction in the East Bay during 2015, a 27% increase from 2014. However, there were approximately 4,600 fewer housing units permitted for construction than there were new households moving into the region in 2015. Even as the supply of housing is projected to increase in 2016 and 2017, Beacon Economics predicts that the price of existing single-family housing units will increase by 8% to 9% in 2016.