June/July 2016 47 “If we do not make improvements in all of these areas… other tech centers will be eating our lunch in a few years,” Guardino said. Education and R&D may be weak spots, but not all sectors are wobbly. In fact, there were lots more construction workers eating their lunches on Silicon Valley job sites last year than five years earlier. Considered something of a bellwether of a region’s overall economic health, the construction industry has bounced back in a major way from unemployment rates exceeding 25 percent during the depths of the recession in 2010. In 2015, that rate had plummeted to 6.5 percent. According to statistics compiled by the Builders’ Exchange, 45,000 people were employed in Santa Clara County’s construction industry in 2015. That compares to the nadir year of 2010, when only 31,400 workers were on the job, and the peak year so far this century—52,200 in 2000. Says Michael Miller, executive director of the Builders’ Exchange of Santa Clara County. “The last two years in Silicon Valley have been crazy good. So, we might be slowing down a bit to just plain good.” He remains optimistic about the near future, as might be expected: The value of commercial construction starts around the Valley in 2015 was $1.9 billion, but that was actually down from $3.6 billion a year earlier, when such huge projects as Apple Inc.’s 2.8 million-square-foot “spaceship” headquarters campus got underway in Cupertino. “The amount of commercial real estate construction has been amazing,” Miller said. “But we have also had such huge projects in recent years as Levi’s Stadium in Santa Clara (completed in 2014) and the BART extension from Fremont to North San Jose.” And the amount of commercial real estate finished last year was far greater: 4.5 million square feet last year versus 1.6 million square feet in 2014. One of the hottest areas of activity in 2015 was Fremont, Silicon Valley’s second-largest city behind San Jose. The city of 230,000 anchoring the Valley’s foothold in Alameda County saw major expansions from some of its biggest companies, along with the arrival of some new ones. “We certainly saw a continuation of robust business expansion in Fremont last year,” said Christina Briggs, the city’s deputy director of economic development. That included Tesla Motors Inc., the manufacturer of luxury electric automobiles, which already has the capacity to build 100,000 vehicles annually at its 5.5 million-square-foot plant along I-880 in south Fremont. The company gobbled up another 1 million square feet of space in Fremont alone last year to support its manufacturing activities. Briggs said other companies expanding their Fremont operations were the Taiwan-based power supply manufacturer Delta Products Corp. and Seagate Technology LLC, which consolidated its sizable R&D activities from overseas into the former 412,000-square-foot solar panel manufacturing plant of Solyndra, which declared bankruptcy in 2011. City officials are eager to attract manufacturers to Fremont, where there are still large areas of land available for development at comparatively inexpensive prices. Last year also saw the arrival in Fremont of Living Spaces, a trendy furniture retailer based in La Mirada with 14 stores in California and Arizona, which now operates its first Northern California retail store and warehouse/ distribution center, embracing 300,000 square feet. And if Living Spaces wants to expand? No worries. There are still about 2 million square feet of what Briggs describes as Class A industrial space. Other measures of the region’s economic health in 2015 were somewhat mixed. Over the long term, Silicon Valley’s labor productivity is up substantially compared to the 1990s and is 11 percent higher than in 2000. VC investment totaling $24.5 billion—a $4.7 billion increase over 2014—included both Silicon Valley and San Francisco. The 2015 investment was fairly equally divided between the two, with the former garnering $11.13 billion, while $13.34 billion was invested in San Francisco firms. Only 2000 saw a higher level of VC funding activity in the region. While the biggest hauls of VC investment among Silicon Valley companies went to Palo Alto software firm Palantir Technologies Inc. (two separate contributions of $450 million and $429.8 million), the San Francisco companies attracting big-time VC financial backing read like a ”Who’s Who” of trendy corporations. Airbnb Inc., the website that lists private properties available for rent worldwide, received $1.5 billion. Uber Technologies Inc., which creates the smartphone applications that connects drivers with people who need rides, pulled down a cool $1 billion last year from venture capitalists. Matching that amount was the financial services firm, Social Finances Inc. Guardino has some advice for local business and community leaders: You may not be able to be No. 1 in everything, but work hard to make Silicon Valley the place everyone else still wants to emulate. “They are all doing everything they can to pass us up and defeat us,” he says. “But that’s because other tech regions know we are still the gold standard.” n SHUTTERSTOCK (2) YOU MAY NOT BE ABLE TO BE NUMBER # 1 IN EVERYTHING, BUT W ORK HARD TO MAKE SILICON VALLEY THE PLA CE EVERYONE ELSE S TILL WANTS TO EMULATE.
South Bay Accent - Jun/Jul 2016
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