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2015 Silicon Valley Index: Tech economy flourishing from San Jose to San Francisco and getting hotter

2015 Index coverJoint Venture Silicon Valley’s annual economic study shows boomtown growth straining Bay Area’s housing, transit, roadways

Feb. 3, 2015 – Silicon Valley’s economy is thriving from San Jose to San Francisco, surging to levels that are overwhelming the Bay Area’s capacity to handle it, according to the 2015 Silicon Valley Index released today by Joint Venture Silicon Valley.

The comprehensive yearly analysis of the economic strength and overall health of Silicon Valley shows the region with nearly 58,000 new jobs – the highest growth rate since 2000 – 42,000 new residents, average annual earnings of $116,000, venture capital investments higher than any other year since 2000, 17,000 new patent registrations and more than 16 million square feet of new commercial building space approved.

At the same time, the wave of prosperity continues to widen the middle-income gap and strain the region’s ability to accommodate its ever-rising housing costs, commuter rates, traffic and transit ridership.

The data, prepared by Joint Venture’s Silicon Valley Institute for Regional Studies, also indicates that San Francisco is playing an increasing role in complementing this growth, with impressive gains in employment, income, venture capital and angel investments and new patents.

“The world’s hottest regional economy keeps getting hotter,” said Russell Hancock, President and CEO of Joint Venture. “We’re poised now to blow through all the employment, venture capital and patent records that were set during the crazy dot-com period, only this time we haven’t spiked into it.

“Most striking of all is the stunning emergence of San Francisco,” added Hancock. “The City has always been a thriving microeconomy across the traditional sectors, but today it has to be said that San Francisco and Silicon Valley have become twin engines in driving the region’s innovation and entrepreneurial activity.”

The 87-page 2015 Index reports the latest data and trends in economic development, workforce, housing, education, public health, land use, environment, governance, arts and culture and other sectors throughout Santa Clara and San Mateo counties and portions of Alameda and Santa Cruz counties and San Francisco.

The Index is published in conjunction with the annual “State of the Valley” conference, a town hall-style gathering of regional leaders, elected officials and citizens in a daylong discussion of Silicon Valley’s economic opportunities, challenges and future. The 2015 conference takes place Wednesday, Feb. 4, at the Santa Clara Convention Center.

Highlights of the 2015 Index include:

Jobs – The number of new jobs grew by 4.1 percent, bringing the region’s job total to nearly 1.5 million. Silicon Valley added 57,951 new jobs between Q2 2013 and Q2 2014; San Francisco added another 18,499 for a total of 76,450 in Silicon Valley and San Francisco.

Investment– Venture capital investments in Silicon Valley and San Francisco shot up, reaching $14.5 billion in the first three quarters of 2014 alone – more than in any other year since 2000. San Francisco’s share was $7.1 billion, a 68 percent spike over 2013. Cleantech venture capital investments increased dramatically as well in 2014, reaching an all-time high of nearly $3.3 billion.

IPOs/M&A – 23 of the 275 U.S. Initial Public Offerings in 2014 were by Silicon Valley companies, three more than the prior year. As of Q3 2014, Silicon Valley was on pace to reach 2013 merger and acquisition activity levels, while San Francisco exceeded the number of deals in 2013 in the first three quarters of 2014 alone. During that time period, there were 560 M&A deals involving Silicon Valley companies, and 403 involving San Francisco companies.

Innovation – The number of Silicon Valley patent registrations continued to rise, reaching 16,975 in 2013 (1,910 more than the previous year). The largest share (40 percent) of the patents was in Computers, Data Processing and Information Storage, with another 24 percent in Communications.

Population – The entire Silicon Valley region (including Santa Clara and San Mateo Counties, Fremont, Union City, Newark and Scotts Valley) grew by nearly 42,000 people between January 2013 and January 2014. During that period of time, Santa Clara County was the fastest growing county in the state at 1.5 percent – nearly twice the growth rate of the state as a whole (0.9 percent) – and a few Silicon Valley cities (Campbell, Milpitas, Foster City and Morgan Hill) grew three to four times faster than the state.

Income – Average annual earnings (including wages and supplements) in Silicon Valley and San Francisco as of Q2 2014 were $116,033 and $104,881, respectively, compared to $96,663 in the nine-County Bay Area, $70,847 in California and $61,489 in the United States. Median household income in 2013 in Silicon Valley was $94,534 and $79,778 in San Francisco.

Housing – Home prices and rental rates continued to rise in 2014, with a median home sale price of $757,585 (7.5 percent higher than 2013 and more than $360,000 higher than the median price throughout the state) and an average rental rate of $2,333 per month (11 percent higher than 2013) in Santa Clara and San Mateo Counties.

Commercial space – The amount of approved development hit skyscraper levels in FY 2013-14 to 12.9 million square feet – nearly twice the floor area of the Pentagon, the largest U.S. office building. This amount of net non-residential development is far more than any other year over the last decade, and is 2.6 million square feet more than the last peak in 2004.

Published annually since 1995, the Silicon Valley Index findings are reported in five major sections: People (talent flows and diversity); Economy (employment, innovation and entrepreneurship, commercial space, income); Society (preparing for economic success, early education, arts and culture, quality of health, safety); Place (environment, transportation, land use, housing); and Governance (city finances and civic engagement).

The 2015 Silicon Valley Index is accessible online at www.siliconvalleyindicators.org and may be downloaded from the Joint Venture website at www.jointventure.org/images/stories/pdf/index2015.pdf.

About Joint Venture Silicon Valley

Joint Venture Silicon Valley was established in 1993. A nonprofit organization, the group convenes the region’s leaders across every major sector – government, business, academia, labor, and community organizations. The organization provides data and analysis on our region’s challenges, and leads initiatives to address those challenges. Joint Venture is funded by cities and counties, local companies, colleges and universities, labor and workforce institutions and foundations. For more information, visit www.jointventure.org.

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