This week, CrediFi published a report on lending activity in California, highlighting a rise in the Central Valley. Often outshone by Silicon Valley and Los Angeles, Sacramento has demonstrated strong CRE lending activity over the past two years.
Citing Cushman & Wakefield’s new investment report, GlobeSt.com reported that Sacramento office investments exceeded the $1 billion mark for the third consecutive year in 2018, marking the highest dollar volume on record for Sacramento’s office market.
What else is happening in the Golden State?
Move over Silicon Valley
For a few years, San Francisco companies have been attracting more venture capitalist dollars than its Bay Area neighbor to the south. This is one of the key reasons San Francisco and San Jose metros added the most tech jobs in the country in 2018.
The SF Chronicle reported that the San Francisco metro area beat out larger cities like Los Angeles and New York with a net gain of 20,566 tech jobs in comparison to the 13,140 tech jobs added in the San Jose metro area. With a strong job market, the office sector continues to grow at a record-breaking pace. Such growth does not come without some adverse side effects such as unmet demand for housing and increasing traffic congestion.
With plans to pass congestion pricing in Manhattan, are cities in California up next?
In New York, Gov. Andrew Cuomo landed enough votes to pass congestion pricing. By April 1, the state legislature will make a decision on whether or not to adopt the plan as a part of the 2020 budget. If approved, the Big Apple will be the first city in the country to impose this type of toll. The funds will help fix the MTA’s failing subway system and encourage the use of public transportation.
With traffic congestion increasing due to unfettered growth, San Francisco is considering road tolls in four busy areas in the city. Although California politicians might favor implementing congestion pricing in their state because of the money it will generate, it’s unlikely it will gain ground anytime soon. The SF Chronicle notes that it’s illegal for California cities to tack fees onto busy public roads to generate money for mass transit.
Download our report to gain insight into CRE lending trends by California MSAs from 2016 to 2018.