Here at MEF we are always analyzing data to understand our local economy. Recently I reviewed datasets on residential and commercial real estate vacancies in Marin. The trends and what they suggest are concerning for our economy.
According to multiple Marin commercial real estate reports, office, retail and industrial vacancies are increasing. San Rafael and Novato have well over 1 million square feet (sq. ft.) vacant space in all categories combined and both cities experienced a net increase of availability for 2018. While that is not a lot of vacant space, the fact that vacancies have gone up when there has not been any significant commercial developments for the last decade suggests companies may be leaving those cities (and possibly leaving Marin) or downsizing. A well-known leasing agent also confirmed lack of demand with few property showings and noted “it doesn’t seem like we have the startup, job creation, or the person tired of commuting to the City that wants to open up an office here.”
That is a bad trend for Marin’s economy and for residents that depend on local businesses for goods or public services funded by the taxes those businesses pay. From a local resident employment perspective, it is even worse. If you consider a ratio of 200 sq. ft./office worker, there is a lost opportunity for local jobs that would reduce residents need to commute out of Marin and pump extra cash into the local economy. So, any way you look at it the increasing vacancy rate of commercial office space is hurting our local economy.
On the residential side we are seeing the opposite; vacancies continue to go down. According to MarinApartments.com, the apartment vacancy rate in the 4th quarter of 2018 was 3.2%, almost a full point lower than the same period in 2017 (4.1%). A decline in vacancy rates suggests that rents are likely to continue rising. According to CoStar Group, Marin’s average apartment rents at $2,463 per month. Since landlords typically require an income of 4X rent, a family would need an income of $100,000 to secure adequate housing. According to the 2017 Census, only 52% of Marin households had incomes of $100,000 or more confirming many Marin residents cannot afford to pay the average rent of an apartment.
You don’t have to be a data geek like me to understand how the two opposing trends pose deeper threats to our economy. Residents will feel the impact of local businesses closing or diminished job openings, especially of higher wage service jobs, because companies can’t suitably locate here. Meanwhile, as housing costs continue to increase there is less disposable income that goes towards eating out, shopping and buying new vehicles-all major contributors to Marin’s economy. I see this as a concern, and I hope you do too.
Recently the Marin County Board of Supervisors accepted survey results produced through a “National Citizens Survey” (“the Survey”). The Survey is designed to capture a snapshot of a community’s opinions on a common set of themes such as “governance” (like how our public sector functions) and characteristics like “safety” and the “economy.” There are over 120 questions including qualitative and open-ended questions. Over 3,700 responses were received through both written and electronic form. The Survey also benchmark’s responses against other like communities (there were between 25-40).
On January 29th the Marin Economic Forum in association with the San Rafael Chamber of Commerce, hosted “Forecasting the Future: A Spotlight on Workforce Challenges and the Future of Work.” The conference was intended to share our thoughts on the national and local economy in 2019 and to dive into the topic of workforce development considering the challenges employers in Marin face in attracting and retaining workers. MEF CEO Mike Blakeley set the stage by noting the low unemployment rate in Marin (2.2%) is both a positive (people have jobs) and a negative (employers struggle to fill jobs) and doesn’t capture the fact many of our highest skilled workers are employed outside of the County. How we manage our future workforce will be critical to our economy.
MEF Chief Economist, Dr. Rob Eyler, provided an excellent overview of key economic indicators to be considered when looking at the national economy. Dr. Eyler acknowledged that the equity markets (where many people hold stocks and retirement plans) are going to continue to be volatile based on the uncertainty of things like our national political environment, a current trade dispute between China and the U.S. and even some geopolitical issues such as the “Brexit” (Great Britain’s potential withdrawal from the European Union). Dr. Eyler encouraged all of us to refrain from watching our portfolio’s every day least we stress ourselves out.
The big question was whether the U.S. economy was headed for a recession, as has been suggested by some economic pundits. In his view Dr. Eyler, of course supported by excellent data, confirmed signs of a slow-down but commented that the effect of any slow-down and how significant it will be is really unknown. As to the dreaded “R” word, Dr. Eyler felt that it would take a major event to trigger an actual recession despite indicators that demonstrate some likelihood.
We then hosted a panel on the topic of workforce development with Elizabeth Pratt from the College of Marin (COM) and Bruce Wilson from the Workforce Alliance of the North Bay (WANB). This panel dove into the issue of how Marin’s workforce is being trained for the jobs of the future, pointing out specific programs such as “CareerPoint” in Marin that provides training programs for job seekers and COM’s Career Technical Education programs.
Findings from a report conducted by the Marin Economic Forum that captured employer concerns regarding hiring needs and strategies in the hospitality and “applied business technology” sectors were shared with the audience. The report confirmed that employers are facing challenges finding talent with the right experience and skills, including “soft skills” like communication or conflict resolution. Both sectors are expected to increase the number of employees by 2023 so it was clear that COM and WANB have a future role to play with Marin’s workforce. Both organizations stated their need for employer input to assure relevant training.
In a Key Note speech Craig Nelson, Chairman of Nelson companies, which includes Nelson Staffing, shared with the audience the tactics employers can adopt to attract and retain workers. Besides the obvious measures such as increasing wages, employers are focusing on a solid brand reputation to attract employees as well as strengthening their benefits programs, including perks like subsidizing transportation, to offset the high cost of living in Marin that is a dominant theme in the challenge of hiring.
The program was closed by Joanne Webster, CEO of the San Rafael Chamber of Commerce who shared a poignant story about the work-life balance: “We work 8 hours a day, we sleep 8 hours a day, and if we have to commute an hour each way to work that only leaves so many hours in the day for family or exercise or other things.”
In the end, as noted by Dr. Eyler, “if I knew the future I wouldn’t be here right now” suggesting that try as we might, we don’t know what our future economy will be. We do know that a big part of our economy depends on the workforce we have here in Marin to support our businesses that want to grow and keep our economic vitality strong. Its our job at MEF to make sure Marin residents are aware of these issues and to give them a platform to solve them. Forecasting the Future was a great demonstration of that.
As we all flip the calendar to 2019 MEF is excited about conducting a range of activities around two critical issues affecting Marin County’s economy: workforce development and business retention & expansion. Let me explain why we are focusing on these areas:
The data shows that 60-80% of a region’s economic growth results from existing businesses, not attraction of new businesses. This is important because Marin’s economy does not rely on, or encourage, major manufacturing or other industries that are characterized by large-scale companies (1000 employees or more). In fact, we have an inverse situation here in Marin County; over 85% of our businesses are 10 people or fewer. For smaller employers, expanding a business carries risk but that risk can be mitigated with an efficient and responsive business environment. So MEF is going to work on a County-wide level with public and private sector stakeholders to address issues that affect businesses ability to compete and sustain.
Part of the ability to compete is having a secure workforce. Employers in Marin are facing difficulty in retaining and attracting employees. Fortunately, there are a number of good organizations in Marin providing skills training and tools to link job seekers with employers to help ease this challenge. However, MEF is thinking about Marin’s future workforce-not only our younger job seekers but also the needs (and emerging needs) of our employers in important industries like biotech, healthcare and the creative industries to name just a few. Marin (and the Bay Area) is the envy of a lot of regions for having these industries locate here but if we don’t ensure companies have a talent pipeline or a good business environment we could just as easily lose them to other regions. MEF has an important role to play here by helping to understand the future trends of these industries and what that means from a workforce perspective-including linking industry demand back to job seekers, training entities and the education sector.
To kick things off in 2019 we are hosting “Forecasting the Future: Workforce Challenges and the Future of Work” on January 29th in association with the San Rafael Chamber of Commerce. This important event will feature discussions on the challenges employers face with hiring and keeping employees as well as a preview of Marin’s economy in the year ahead. You can register for this event below.
So MEF is excited about what’s ahead in 2019 because we know our work in these areas will have value to all of Marin’s residents while keeping our economy in focus. Make sure to be on the lookout for more public events and important studies that represent our effort to secure Marin’s economic future-in 2019 and beyond!
-Mike Blakeley, CEO, Marin Economic Forum
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On Thursday November 29 I had the chance to attend my first event since joining MEF, the “North Bay Business Journal 2018 CEO Roundtable” in Santa Rosa. The event featured a panel of CEO’s from the North Bay’s most recognizable companies: Marin’s Ghilotti Bros., Inc and Hospice by the Bay, as well as Clover Sonoma, Jackson Family Wines, Traditional Medicinals, Nelson Companies (which has an office here in Marin) and Torn Ranch (which had their first storefront in San Rafael). The excellent discussion on various business topics provided me three big takeaways to share:
1. A lot of North Bay businesses exist here because of a strong connection to the land
Some of the most successful companies in Marin and beyond are multigenerational family owned businesses. These companies aren’t still here today because the factors of production suggest they will be most competitive by manufacturing here; they rely on inputs which are unique to Marin and the Bay Area and have a deep connection to Marin. However, these companies need to be supported if they are going to stay in the North Bay and grow. That is why the work of the MEF to ensure a competitive Marin economy so important to our community; we need and want those companies to stay here and flourish.
2. The industries that exist here in the North Bay are innovative and poised to lead in the future
If you survey the sectors of Marin’s economy you will find the sectors of the future: biotech, cleantech, non-profits, healthcare and even agriculture. We are fortunate that these sectors exist, but we need to ensure they stay here and grow and to do so we need a sound public-private dialogue between elected officials and companies in these sectors.
3. All 7 CEO’s said their future success depends on making the business environment friendlier
For those of you who own or have owned a business in Marin I bet you would say the same thing. We all know that there are regulatory burdens and processes that can make doing business difficult; it could be said of most places. However, we need to be aware and have ways to address those policy issues rather than force companies to deal with them.
As a first event to attend I couldn’t have hoped for a more relevant and rich discussion. The experience confirmed that the MEF can be a critical partner to both private and public sector as it relates to securing a strong economy of the future. What a great start!
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Lest readers think this blog space is a rant about some of the not-so-good things in Marin, this week we offer this.
Two Marin cities – San Rafael and Novato, were recently named among the Best Places to Live in the U.S. by Livability.com. The online community research publication ranked San Rafael 26th and Novato 77th among 100 cities across the country. Ann Arbor, Michigan, took the top spot.
San Rafael was recognized for having an economy strong in education, technology and tourism, as well as an array of cultural, arts, shopping and dining options. The report also highlighted China Camp State Park, Dominican University of California, Kaiser Permanente and attractions such as the California Film Center and Rafael Film Center.
Novato’s 3,600 acres of open space was highlighted, particularly Stafford Lake Park and 1,558-foot-high Mount Burdell. The city was given high marks for high-achieving Novato Unified School District, as well as having a strong local economy of biotech and small technology companies along with a variety of retail centers. The report also highlighted Novato Community Hospital, Novato Healthcare Center and the city’s Old Town district.
Livability.com ranked nearly 2,300 cities on more than 40 data points measuring economics, housing, amenities, infrastructure, demographics, social and civic capital, education and health care.
Click here to see the top 100 best places to live.
The Marin IJ’s “ Rail Spur Takes Shape” story reveals the so-called “train to nowhere” is about to go somewhere, with work occurring daily at the future Larkspur stop on the south side of Cal Park Tunnel. That stop, of course, is the link to the SMART train in downtown San Rafael and equally important, to the Golden Gate ferry system at the Larkspur Landing ferry terminal. The 2.1 mile extension has a budget of $55.3 million. The Metropolitan Transportation Commission has provided some of the funds for the extension, while a federal grant and local sales tax dollars are covering the rest of the cost for the extension.
Two days later, another page 1A story appeared, “Commute in Marin Worst in the Bay Area.” Cringe! We knew it was bad, but the worst?
Overall, Marin residents take 32.3 minutes to get to work, while Bay Area-wide average time is 31.6 minutes, according to the Metropolitan Transportation Commission’s Vital Signs program (http://www.vitalsigns.mtc.ca.gov/), which is designed to give Bay Area residents a snapshot of key transportation, land use, environmental and economic policy trends. Belvedere (40.6 minutes) and San Anselmo (35.5 minutes) had the longest average commutes while San Rafael averaged the shortest commute time (28.4 minutes). It’s worth a look at the story to learn more about Marin residents’ commute patterns. For example, 12.4% of us commute 60-89 minutes to get to work daily.
We’ve said it before and we’ll say it again, creating more affordable housing, developing a local and highly competent workforce, improving our transportation systems and options and addressing inequality are all related, connected and inseparable, in good times and bad. Our mission is to address them individually and holistically so Marin can become a better version of itself.
-Robin
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For the first time in recent memory, a Marin job fair is set for June 7, with more than 70 employers lined up, and 20 more on a wait list. The free event, running 11 a.m. to 2 p.m. at San Rafael’s B Street Community Center, 618 B St., was originally planned as a “boot camp” for the area homeless population, said Andrew Hening, San Rafael’s director of homeless outreach and planning. But the interest from the business community was so overwhelming that organizers decided to open it up for the entire pool of job-seekers.
The response to the job fair hints at how dire Marin’s workforce shortage problem has become. Marin’s unemployment rate has hovered near 3% for over a year which economists consider “underemployment.” So, new strategies like a job fair can help maximize our local workforce potential and provide employers a new hiring source. Job seekers who have been on the sideline for a number of reasons, can be hired, trained and brought into the workforce at entry and mid-level service jobs. Rather than fill jobs with people who live outside of the county, we should tap into our local population as much as we can. Any effort to hire local workers and lessons commute traffic helps maintain our quality of life and is a good thing for our community.
Marin Economic Forum wholeheartedly supports the job fair and encourages all of us to promote this event. Congratulations to the 70+ local employers that have signed up to participate in the June 7 Jobs Fair!
Congratulations to Napa and Salt Lake City for coming up with solutions to build affordable housing in their respective communities.
At the Housing Shortage and Inequality event that MEF hosted May 4 at the Embassy Suites in San Rafael, MEF offered a few creative solutions to addressing these challenges, including preparing an Environmental Impact Report (EIR) in a specific market area so communities and developers can have plans and pre-approvals in place to create new neighborhoods.
A recent Marin IJ story reported that Marin grew more in 2017 (population) than its county neighbors of Sonoma and Napa, attributing much of that growth to last October’s wine country wildfires. The population estimates were provided by the state Department of Finance and showed that Marin County had a net people gain of 624, or 0.2%, compared with net population losses of 0.3% in both Napa and Sonoma counties. Throughout the state, more than 13,200 housing units were lost last year, mostly to fires in northern and southern California, the IJ reported.
On January 29th the Marin Economic Forum in association with the San Rafael Chamber of Commerce, hosted “Forecasting the Future: A Spotlight on Workforce Challenges and the Future of Work.” The conference was intended to share our thoughts on the national and local economy in 2019 and to dive into the topic of workforce development considering the challenges employers in Marin face in attracting and retaining workers. MEF CEO Mike Blakeley set the stage by noting the low unemployment rate in Marin (2.2%) is both a positive (people have jobs) and a negative (employers struggle to fill jobs) and doesn’t capture the fact many of our highest skilled workers are employed outside of the County. How we manage our future workforce will be critical to our economy.
