December 2016 Update

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Disclaimer: The City of Berkeley makes no representations about the suitability of the information contained in this

document for any purpose. The information Is provided "as is" without warranty, either express or implied, of any kind.

The published document may contain technical inaccuracies or typographical errors. Changes are periodically added to

the information herein. The City of Berkeley may make improvements and/or changes to the document at any time.

Economic Dashboard

Office of Economic Development

CITYWIDE ECONOMIC DASHBOARD

EMPLOYMENT………………………………………………………………………...........………3-4• Labor Force & Employment Figures• Job Growth by Industry Sector

BUSINESS DEVELOPMENT……………………………………………………………………….5-6• Top Employers• Innovation Sector• Small Business Revolving Loan Fund

COMMERCIAL ACTIVITY…..…………………………………………………………….………7-10• Office Trends & Transactions• Manufacturing Trends• Retail Districts• Sales Tax Revenues • Vacancy Rates

DEVELOPMENT & HOUSING…………………………………………….………….……….11-12• Construction & Pipeline• Housing Costs

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• Berkeley’s average unemployment rate for Q3 2016 (July-September) was 3.7%, slightly down from 3.8% during the same period the previous year.

• In comparison, Alameda County’s average unemployment rate in Q3 2016 was 4.6%, while California’s was 5.5%.

• The unemployment rate continues to fall despite steady increases in the overall participation in the labor force.

• As of the most recent update in Q4 2015, there were 67,172 jobs located in Berkeley. Berkeley’s jobs to employed residents ratio is calculated at approximately 1.13.*

• The industry sectors with the largest job growth between 2015 Q1 and 2016 Q2 were Educational Services (1,098 jobs added), followed by Professional, Scientific and Technical Services (210 jobs added) and General Merchandise Stores (201 jobs added).

YearLabor Force

EmployedResidents

Unemployment Rate

2016 63,033 60,700 3.7%

2015 61,666 59,333 3.8%

2014 60,733 57,833 4.8%

Berkeley Q3 Averages, 2014-2016

labor force & employment figures

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*The 2015 Q4 figure for employed residents was 59,533. Sources: CA Employment Development Department, Monthly Labor Force Data; Bureau of Labor Statistics, Quarterly Census of Employment and Wages

employment & jobs: fast facts

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Unemployment Rates, Q3 Averages 2000-2016

California Alameda County Berkeley

Sector Employees Q1 2015 Employees Q1 2016Percent Increase in

EmploymentNew firms

Data Processing, Hosting, and Related Services 15 69 362% 5

Beverage and Tobacco Product Manufacturing 14 52 261% 4

General Merchandise Stores 96 297 209% 3

Administration of Human Resource Programs 63 133 111% 9

Emerging Industries in Berkeley

growth by industry sector

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210201 194 191

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Industry Sectors with Greatest Numbers of Jobs Added, 2015 Q1 - 2016 Q1*

* Note: The industry category with most jobs added was Educational Services (1,098 jobs, 6% increase), not displayed

because of space limitations

Source: Quarterly Census of Employment and Wages

• As of November 2016, there are 373 startups based in Berkeley offering 213 offering jobs in software and bioscience fields.

• Since Spring 2016, the most recent notable venture investment was $6.5 million raised by Madefire.

• A Berkeley-based artificial intelligence startup (Wise.io) was acquired by General Electric in November 2016.

• NYC-based immune system and genetics startup, Girihlet, moved to Berkeley in February 2016.

• The Batchery, Berkeley’s first non-UCB startup incubator, moved from Berkeley to Oakland this year, but a new incubator – “The House” – is a new, independent 7,000 SF incubator for start-ups created by UCB students, faculty, and alums.

top employers & innovation sector

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[top 25 employers, by number of employees]

A wall of illustrations for Madefire, which creates interactive comic books called “motion books.” Image source: “Señor Danimal,” Flickr.com

[innovation sector update]ALTA BATES MEDICAL CENTER LIFELONG MEDICAL CARE

ANSYS, INC MEYER SOUND

BAYER HEALTHCARE, LLC MSCI INC

BERKELEY BOWL PRODUCE PACIFIC STEEL CASTING COMPANY, LLC

BERKELEY CEMENT INC RECREATIONAL EQUIPMENT INC

BERKELEY CITY COLLEGE SIEMENS CORPORATION

BERKELEY MARINA DOUBLETREE SITEWORKS LANDSCAPE, INC

BERKELEY REPERTORY THEATRE UNIVERSITY OF CALIFORNIA, BERKELEY

BERKELEY UNIFIED SCHOOL DISTRICT US POSTAL SERVICE

CITY OF BERKELEY WEATHERFORD MOTORS INC

DYNAVAX TECHNOLOGIES CORPORATION WHOLE FOODS MARKET CALIFORNIA INC

KAISER PERMANENTE YMCA OF THE CENTRAL BAY AREA

LAWRENCE BERKELEY LABORATORY Source: EDD, QCEW Data Q1 2016

Biosciences14% Clean Tech

6%

Consumer Products

7%Electronic Devices

9%

Other10%

Professional Services

16%

Software 38%

Berkeley's Startup Economy

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The City of Berkeley’s Revolving Loan Fund provides access to capital for businesses that don’t qualify for traditional commercial loans. Since the program was launched in 1980, the City has lent over $1.7 million to 39 borrowers. There are currently 7 active loans and two approved loans pending disbursal. In Q3 2015, the RLF loaned $150,000 to Minuteman Press (see sidebar).

PORTFOLIO SUMMARY

Total Loans Active Loans

Number of RLF Loans 39 7

RLF $ Loaned $1,745,527 $555,000

Total Non-RLF $ Leveraged $5,636,835 $742,238

Approved Loans (pending disbursal) 2 $250,000

Private Sector Jobs Created 176 36

Private Sector Jobs Saved 50 30

current borrowers include:

Minuteman Press has a long history of operation in Berkeley, having started out as “Captain Copy” in 1972 on Telegraph Avenue, where it primarily served UC Berkeley students and faculty. The shop eventually moved to West Berkeley, and later purchased and merged with the Berkeley branch of the Minuteman Press franchise. Over the years the firm has expanded its operations from photocopying to book printing and publishing.

The $150,000 loan from Berkeley’s Revolving Loan Fund will allow Minuteman Press to retain its diverse, full-time workforce of 12 and continue to anchor West Berkeley’s manufacturing sector into the future.

small business revolving loan fund

2016 Q3 Office Market, Berkeley Indicators

Total Inventory 2,954,339 SF

Under Construction 0 SF

Availability Rate 1.67%

Qtr Gross Absorption 25,267

Qtr Net Absorption 2,238

YTD Net Absorption 2,730

Average Asking Rent $2.65 / SF

office trends and transactions

• Overall office availability dropped to 1.67% in Q3 2016 from 3.61% in Q3 2015. Berkeley continues to have the lowest office availability of any municipality in the immediate sub-market.

• New construction:

• A 61,000 Square Foot (SF) office building and R&D facility has been proposed at 1050 Parker St.

• A retrofit of 2120 Berkeley Way, which will add roughly 20,000 SF of new office space, is under construction.

• Notable transactions and occupancy:

• UCSF and John Muir Hospital are leasing 100,000 SF for a medical office outpatient facility at 6701 San Pablo

• Only 49,314 SF (out of Berkeley’s total inventory of 2,954,339 SF) remains available.

Sources: Newmark Cornish & Carey, I-880/I-80 4Q15 Office Market Report; Colliers.

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OFFICE AVAILABILITY, EAST BAY CITIES2015 Q3 - 2016 Q3

Alameda

Berkeley

Emeryville

Oakland

Richmond

Market-AreaAverage

Manufacturing & Wholesaling, 2016 Q1 Indicators

Total Jobs 4,923

Total Firms 301

Total Quarterly Payroll $94,915,789

2016 Q3 Manufacturing Real Estate

Total Inventory, including Industrial, R&D and Warehouse space (SF)

5,123,893

Industrial Available (SF) 186,836 (4.47%)

Total Availability Rate 3.65%

Average Asking Rent for Manufacturing Space $1.10 / SF

manufacturing trends and analysis

• Berkeley’s largest manufacturing subsectors by employment are chemical manufacturing (1,729 jobs) and food and beverage manufacturing (about 541 jobs).

• Manufacturing job growth increased by 1.5% between 2015 Q1 and 2016 Q1 and there was a 13% increase in the number of firms. However, total manufacturing quarterly payroll decreased by 10%, largely because of continuing layoffs at Pacific Steel Casting.

• Chemical manufacturers and food manufacturers have grown significantly (130 and 70 jobs added between 2015 and 2016 Q1s, respectively).

• The average number of employees per manufacturing firm was 22 in 2016 Q1; the median is 5 employees.

• Average asking rent in Q3 2016 in Berkeley ($1.10) increased slightly from Q1 2016 ($1.02) and is significantly higher than the submarket average ($0.79). Richmond’s asking rent is $0.47 and Oakland’s is $0.82.

Sources: Newmark Cornish & Carey, I-880/I-80 3Q16 Industrial Market Report and QCEW Data 3Q14 – 1Q16.

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Business Spotlight: BayerIn 2015 Bayer announced a $100 million expansion into a testing facility for hemophilia A treatments. This plan builds on a long history in Berkeley - in 1974 Bayer acquired Cutter Labs, which was established in Berkeley in 1903. Bayer is presently the largest private firm in Berkeley with over 1400 employees.

commercial districts and vacancy rates

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District2012 Q2

2014 Q4

2015 Q3

2016 Q1

2016 Q3

Downtown 10.7% 11.2% 8.4% 6.7% 4.7%

Elmwood 10.8% 2.0% 2.0% 1.5% 1.5%

North Shattuck 4.5% 1.6% 2.1% 2.6% 2.6%

San Pablo 7.9% 5.9% 7.3% 7.3% 5.9%

Solano* 4.4% 4.2% 3.5% 5.4% 7.5%

South Berkeley 12.3% 8.9% 7.9% 8.2% 8.2%

Telegraph 17.9% 12.7% 7.1% 7.1% 5.1%

West Berkeley 4.0% 3.9% 3.3% 8.0% 8.8%

University 10.1% 14.7% 14.2%

Citywide Average 8.1% 6.6% 5.9% 7.6% 6.5%

Ground floor commercial vacancy has trended downward since 2012 on average, despite a spike in Q1 of 2016. Vacancy rates in the Downtown and Telegraph showed remarkable improvements; however, West Berkeley and Solano have had marked increases in their vacancy rates. In West Berkeley the former site of Pyramid Brewery has remained vacant (but is now under construction) and comprises almost half of the vacant square footage. Solano and University had several new vacancies in 2016 Q1 that have not yet been filled.

*Note: Solano data does not include the vacant Oaks Grove theater.

Vacancy Rates by District, Calculated by Square Footage, 2012 – 2016

Ground Floor Commercial Occupancy by Category, by District, 2016 Q3

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Total Annual Sales Tax Revenue - Past 4 Quarters Q4 2014 – Q3 2015 Q4 2015 – Q3 2016 Change

City of Berkeley $17,087,422 $18,245,495 +6.8%

SF Bay Area (Nine County Region) $1,404,469,803 $1,456,872,751 +3.7%

State of California $6,223,946,312 $6,374,288,970 +2.4%

sales tax revenues

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Berkeley’s sales tax revenues have increased significantly since 2015, with a growth in sales tax receipts that was almost double the rate of increase in the Bay Area and almost triple the rate of increase statewide. The Food Products and Services subsector is the largest contributor to the city’s sales tax revenue, followed closely by General Retail. Source: MuniServices

$3,756,273 $3,757,655

$4,003,390 $3,972,355

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2012 2013 2014 2015 2016

City of BerkeleyQ2 Sales Tax Revenues, 2012-2016 (in 2016 $)

15.20%

7.03%

32.41%

28.52%

3.87% 12.97%

City of Berkeley 2016 Q2 Sales Tax Revenues by Subsector

BUSINESS TO BUSINESS CONSTRUCTION

FOOD PRODUCTS GENERAL RETAIL

MISCELLANEOUS TRANSPORTATION

Over the last two years Berkeley has permitted several large projects that have contributed to the large spikes in permit valuation seen in the chart above; these major projects have been roughly equal to the total value of all other permits in a given quarter. The most recent large projects are at 801 Grayson, which was permitted in 2015 Q4 and will become an expanded pharmaceutical manufacturing plant; and 2600 Shattuck Avenue (“Parker Place”), permitted in 2015 Q2, will become a 155-unit apartment building.

As of October of 2016, there are currently 29 housing developments of 5+units that are entitled for development or under construction, which will contain 2,148 net new units; this represents a marked increase over the number of units that were entitled or under construction as of December of 2015 (1,605). An additional 1,107 units (in 19 distinct projects) are proposed. The overall trend in the last two years has been one of increasing numbers of units in the development pipeline; by comparison, only about 1,100 units were completed from 2005 to 2015.

construction & pipeline

Multi-Unit Projects (5+ Units), 2005 to Present

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Building Permits in Berkeley by Count and Valuation, by Quarter, 2001 Q1 - 2016 Q2, in $2016

Count of Permits Sum of Permit Valuation

housing costs

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Median Sale Price, Single-Family Homes, 2016 Q3

Alameda $949,000

Albany $1,005,000

Berkeley $1,145,000

El Cerrito $747,500

Emeryville $589,500

Lafayette $1,400,000

Oakland $720,000

Richmond $463,000

San Leandro $600,000

San Francisco $1,230,000 (2015 Q3)

Housing costs in Berkeley have, on average, continued to rise in 2016 for both ownership and rentership. The brief dips in single-family home prices in Q1 2016 and in Q3 2016 are offset by an overall upward trend for housing costs, stoked by a strong overall economy and a restricted housing inventory. The all-time highs for housing pose challenges for Berkeley’s labor market and low-income communities.

Sources: MLS, Courtesy Red Oak Realty; Berkeley Rent Stabilization Board.

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Housing Prices in Berkeley, 2004-Present

Median Rents

Median Sales Price, Single-Family Homes