Marques Fields

The 601W Company, a New York developer, has proposed building a 35-story hotel and residential tower atop an historic building at One Montgomery Street in San Francisco. The two- story building, once the headquarters of Crocker National Bank, and currently occupied by Wells Fargo & Co., which acquired Crocker in 1986, was originally built in 1908. 601W bought One Montgomery Street for $48 million in 2011.

The speculative plan for the 500-foot tower would add about 266,000 square feet of hotel and/or residential space to the city’s Financial District. Three possible plans have been filed, with various mixes of hotel and residential usage:

•234 hotel rooms and five market-rate residential units at the top five floors
•152 hotel rooms and 23 market-rate residential units
•52 market-rate residential units with no hotel rooms

None of the plans have affordable housing on-site. The first two plans wouldn’t be subject to the city’s new affordable housing requirements under Prop. C, which only apply to projects of 25 or more housing units. The 52-unit housing proposal could pay a fee equal to the value of 33 percent of the project’s units under Prop C instead of building affordable units. Some observers have speculated that the new affordability rules are pushing more projects to become hotels rather than housing.

While the addition of hotel space is likely to be welcomed by the city’s financial district, it remains to be seen if the city will actively consider the proposal to remake the character of an historic building. If approved, the One Montgomery St. project would be only the second new high-rise built in the area in over a decade as well as one of the biggest developments north of Market Street. The current two-story property would be preserved and renovated, and the existing entrance, at the southwest corner of the parcel, along Post Street, would be used for the new tower.

The Bay Area now hosts 746,000 tech jobs, a number that surpasses the previous record established during the late ’90s at the height of the dot-com bubble, by 21,000 jobs. For much of the Bay Area, high-tech jobs are where the action is. Roughly one in five payroll jobs in the Bay Area is in the high-tech industry. What’s more, the employment impact of the tech sector has been rising steadily since the end of the Great Recession. During the Recession, high tech accounted for about 17 percent — or one in six — of all the jobs in the Bay Area. Now it’s one in five.

Over the 12 months that ended in June, tech companies added 34,400 jobs in the Bay Area, a 4.8 percent increase over the previous year. The current pace for tech hiring is slower than the 6.6 percent annual growth rate during the 12 months that ended in June 2015 and the 6.1 percent rate the previous year. But it is still ahead of the 3.2 percent rate for the 12 months ending in June 2013.

The San Francisco-San Mateo region — not Santa Clara County — leads the charge. As of June, San Francisco and the Peninsula saw a 29.5 percent increase — 55,600 more jobs — over the dot-com era levels. Santa Clara County’s tech sector was eviscerated by the dot-com meltdown, and as of June, remained 20,600 jobs, or 5.6 percent, below the peak in December 2000.

The typical Silicon Valley income — well over $100,000 annually — is now double the national average. At the end of March, annual pay averaged $114,920 in Santa Clara County, $114,140 in San Mateo County, and $106,808 in San Francisco, according to the federal government’s closely watched Quarterly Census of Employment and Wages. In the East Bay, wages averaged $70,356 in Alameda County, and $66,820 in Contra Costa County. Sonoma and Solano have even lower average wages.

A report, Technology Works: High-Tech Employment and Wages in the United States, shows that high-tech jobs have been more resilient over the past 10 years to economic downturns than other private sector industries, pay more, create more indirect jobs by far than any other industry, and hold the most promise for continued growth.

Among other findings in the report: Employment growth in tech jobs — defined as those most closely related to science, technology, engineering and math (STEM) — outpaced gains in all other occupations by a ratio of 27 to 1 from 2001 to 2011. For each job created in the high-tech sector, approximately 4.3 jobs are created (multiplier effect) in other local goods and services sectors across all income groups, including lawyers, dentists, schoolteachers, cooks, and retail clerks, among many others.

It is expected that the demand for high tech occupations will be considerably stronger than demand for other workers at least through 2020.

The cost of renting an apartment in the Bay area continued to rise in the first quarter of 2016, although the rate of increase appears to be slowing after years of double-digit hikes. The average apartment in the nine-county region (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma) rents today for $2,482 per month, up 7.1 percent from the first quarter of 2015 – which is not as steep as the previous year-over-year rise of nearly 10 percent.

San Francisco continues to be the most costly market. The average apartment there rents for $3,620 a month, though the rate of increase has slowed to 4.7 percent. In Oakland, the average apartment now rents for $2,866, and the rate of increase was 7.2 percent – down from the 13.7 percent year-over-year rise reported in the last quarter of 2015; a studio in Oakland rents for an average of $2,114. In San Jose, the average apartment now rents for $2,473, up 8.6 percent on a year-over-year basis, while a studio averages $1,802. In Concord, a studio apartment runs $1,385 a month, and a one-bedroom flat runs $1,474.

The regional leveling off is “a good thing,” said Jeffrey M. Mishkin, regional manager at the San Francisco office of Marcus and Millichap, the real estate brokerage firm. “The last three years we’ve lived through two to three times the normal rates of increases in rents,” he said. “It’s still a healthy economy, and it feels like a healthy rental market. But trend-wise and anecdotally, San Francisco, Oakland, and San Jose all seem to be experiencing a little slowdown in the rate of increase — a flattening, not necessarily a dip.”

While some suggest that the tapering increases are an indication of consumer resistance to too-high prices, others point to different factor that makes area rents go up and down: jobs and how much people are paid. When the area’s wages go up, so does the cost of rent. When they drop, so do rental prices. For example, research along this line of thinking reveals that the housing-price booms in the late 1970s and 1990s in San Francisco almost exactly match the employment booms at the same time.

Based on those historical trends, it’s possible that the rate of increase will go back up, should the area’s wages rise in sync with a recovering economy. If that turns out to be the case, the only countervailing effect would be the construction of a lot more moderately-priced apartment units.

Intel Corporation, the world’s biggest maker of semiconductors, is planning to eliminate 12,000 jobs, or 11 percent of its workforce, while it shifts its focus to higher-growth areas, such as chips for data center machines and other gear related to cloud computing.

The intended cuts are the result of the shrinking personal-computer market and the company’s failure to take advantage of the rapid transition to smart phones. Global sales of PCs have been declining for several years and the market that provides Intel with almost two-thirds of its revenue fell to its lowest level in a decade in the first three months of 2016, declining by 9.6 percent. Intel’s troubles reflect the reality that companies that may lead in one generation of computing may not make the technological leap to the next one.

The job cuts will be Intel’s biggest layoffs since it reduced staffing between 2005 and 2009, in the face of the global financial crisis and increased competition. The new cuts will be accomplished through a combination of voluntary buyouts, layoffs, and consolidations of sites across the globe.

Intel, which is headquartered in Santa Clara, California has manufacturing facilities in Oregon, Arizona, China, Mexico, Israel, and Ireland. The company aims to save $750 million this year, after the first 6,000 jobs are eliminated, with an annual savings of $1.4 billion by mid-2017, when the cuts to the company’s current workforce of 107,000 employees, end.

Chief Executive Brian Krzanich said: “Our opportunity now is to accelerate our momentum and build on our strengths. We are evolving from a PC company to one that powers the cloud and billions of smart, connected computing devices.” As part of its push to bolster its cloud-computing serviced, Intel purchased chip maker Altera last year for $16.7 billion. Even so, the company could face competition from companies such as Qualcomm, which makes cheaper, albeit less powerful chips for cloud computing.

Intel’s client computing group, which makes and sells PC chips, had first-quarter sales of $7.5 billion, a decline of 14 percent from the preceding three months, but a gain of 2 percent from the year-earlier period. The data center division posted sales of $4 billion, up 9 percent from a year earlier — falling short of Intel’s target of double-digit percentage growth in that unit.

Overall, the company reported first quarter earnings of 42 cents per share and $13.7 billion in revenue, below the 48 cents per share and $13.8 billion in revenue estimated by analysts.

This past April, the City Council of San Jose voted to lower allowable rent increases in the 44,000 rent-controlled units covered by the city’s rent control law – about a third of the city’s total – from eight percent to five percent a year. The five percent cap went into effect this past June.

While landlords opposed the measure, claiming that a decrease in rent hikes will hurt their ability to maintain their buildings and stay in business, many of the city’s renters have been pleading for relief from skyrocketing rents that are pushing them out of the city.

Before the April meeting, San Jose Councilman Manh Nguyen suggested that the city pass a $1 billion housing bond to build more affordable housing. “The current rent control debate is, unfortunately, a red herring,” Nguyen wrote in his proposal. “What my office is proposing is simple, constructive and a very real effort to address the core issue at the heart of the rent control controversy: a substantial lack of supply.”

San Jose is falling behind in its goal to build nearly 2,400 homes for the poor each year until 2022 for a total of 20,849 affordable housing units. From 2007 to 2013, the city built only 2,956 affordable units – 15 percent of its initial 19,271 unit goal.

While Councilman Nguyen’s proposal was not acted upon in April, this past June, the Santa Clara Board of Supervisors unanimously approved a measure to place a $950 million general obligation bond on the November ballot. If passed by county voters, the bonds will fund the construction of rapid re-housing for the homeless and extremely low-income residents, affordable housing for moderate-income individuals, and provide assistance for first-time home buyers.

Property tax increases will pay off the nearly billion-dollar effort, adding $12.66 to every $100,000 of assessed value. County officials say if their growth models are correct, the tax increase will retire the loan in 30 years. Supporters of the measure acknowledged there is much work to be done relating to the bond measure, which needs a two-thirds majority approval from voters in order to pass.

Widely recognized as home to some of the most expensive real estate in the nation, home prices in Santa Clara County rose 10.4 percent over the past year and the median sales price for a single family home hit $900,000 according to CoreLogic, a company that tracks real estate markets in the Bay Area. Additionally, market tracker RealFacts reports that Silicon Valley apartment rents are now the highest in the state.

In 2015, a similar bond issue was approved by the voters in San Francisco. Proposition A authorized the city to issue up to $310 million in bonds to fund affordable housing programs. Mayor Ed Lee announced his intention to use this bond issue to construct and renovate 30,000 units of affordable housing over the ensuing four years. The last successful city housing bond before this proposal was approved by voters in 1996 in the amount of $100 million. Housing bond measures asking for $250 million and $200 million respectively were defeated by San Francisco voters in 2002 and 2004. Both measures were designed to raise property taxes to pay off the debt.

The Chinese Hospital in San Francisco’s Chinatown originally opened in 1899 as the Tung Wah Dispensary, in order to serve the local population that was denied medical care by the city’s mainstream hospitals. It was destroyed in the 1906 earthquake and rebuilt in 1925 with donations coming from every major Chinatown in the United States, Hong Kong, and mainland China. In 1979, an annex was added, after the 50-year old building was deemed unsafe for not meeting new fire and seismic standards.

In 1998, a capital campaign was launched to raise funds for a new building that would replace the original 1925 structure, and this past April, after 20 years of planning and fundraising, a brand new, eight-story building, called the Patient Tower celebrated its grand opening. It was built from the ground up on the same footprint as the 1925 edifice.

The new, 100,000 square foot, Patient Tower meets all the latest seismic requirements. It contains: 44 Private Acute Care Patient Rooms; a state-of-the-art diagnostic imaging department with all new equipment including a 64-detector CT Scanner, ultrasound, and a MRI; a cardio-pulmonary outpatient unit; four surgical suites; six private Intensive Care Unit beds; an expanded emergency treatment center; a skilled nursing unit with 23 beds; a telemetry unit; and an expanded pharmacy.

In order to make patients comfortable, the new facility has highly efficient climate control systems, 100 percent LED lighting, a patient entertainment and educational system via interactive TVs, and views of San Francisco Bay and many of the city’s iconic structures from many of its rooms. In addition, the new tower’s design features elements of Asian art throughout the building, including hand-painted cherry blossoms in nearly every patient room, towering waterfall canvases in the hallways, and other themes such as flowers, birds, and fish, each symbolizing aspects of life that provide a holistic healing environment.

The new Chinese Hospital, which cost $180 million, was funded by a combination of hospital reserves, a bond issue, and community donations. With its many new features and its professional, bi-lingual staff, this leading-edge facility is poised to embark on its next hundred years of serving the healthcare needs of the residents of Chinatown.