The Tri-Valley economy and area businesses had another strong year in 2018, according to two new reports. Both the East Bay Economic Development Alliance (East Bay EDA), a nonprofit business organization, and Mirador Capital Partners, a Bay Area investment management firm, recently issued reports that detail the latest statistics on the economic well-being of the region, as well as highlight the wealth of attributes that make the Tri-Valley such an important economic area. According to Mirador, "2018 was an exceptional year for the Tri-Valley."
One example can be found in venture capital (VC) activity. California, as a state, leads the nation in VC investments. In 2018, companies in the East Bay area alone received more VC funds than 47 US states. Last year a record $5.1 billion of venture capital was invested in East Bay companies, double the amount invested in 2017. According to the East Bay Economic Outlook 2019-20 report published by East Bay EDA, these investments were primarily spurred by new companies operating in the clean tech, software, biotech, and medical devices and supplies industries.
The record amount of VC investment "is a pretty remarkable statistic," says Stephen Baiter, Executive Director of East Bay EDA in Oakland. "It is certainly an indication of the rise of the East Bay as its own subregion of the Bay Area."
The executives at Mirador Capital Partners agree that the East Bay and, in particular, the Tri-Valley, did well over the past year. "2018 was an exceptional year for the Tri-Valley," according to The Mirador View 2019, the new report from Mirador. "The region's population grew by 2.2% from 2017-2018, more than doubling the growth of Silicon Valley, San Francisco, and the Bay Area as a whole. Public Companies headquartered in the Tri-Valley grew by 20% in 2018, outpacing the S&P 500 by more than 25%. Venture Capital investment in the Tri-Valley exceeded $590 million in 2018, an increase of more than 30% from 2017."
While the East Bay EDA report focuses on the East Bay region as a whole, "it is clear that the Tri-Valley has ascended as a tech center in its own right," notes Baiter. "We see very tangible evidence of that now, whether that is companies like Workday or 10X Genomics, what's been happening with the Livermore Valley Open Campus, and the fact that Hacienda and other areas in the Tri-Valley are increasingly home to either satellite offices or new companies that are starting up in the tech sector."
In its most recent report on the Tri-Valley, Mirador notes several important attributes that make the region so successful. Those attributes include the resilience of the Tri-Valley economy, the skilled talent available locally, and the region's quality of life. The Mirador team interviewed many business executives as part of the research for its report.
"In each conversation, founders and executives credited the exceptional talent they found in the Tri-Valley and the wonderful quality of life," according to the report. That quality of life helps companies grow and thrive. Moreover, "in a year where public equity markets struggled and San Francisco and Silicon Valley experienced net negative migration, Tri-Valley public companies excelled and the population continued to grow," notes the report. "We believe the fundamental qualities that are driving this region's growth will also build resilience in our local economy even in times of broader market volatility."
Don Garman, Founder and Chief Investment Officer of Mirador, has had a great deal of experience with business leaders who cite the quality of life as a compelling attribute of the area. "One of the most impressive CEOs at a Tri-Valley company told me, 'I would rather commute to my happy employees than have my miserable employees commute to me,' " he says.
There are bottom-line reasons for business to embrace the Tri-Valley. According to the report, there is a potential 400% cost differential between offices in the Tri-Valley and San Francisco, for example. Speaking at a recent class on entrepreneurship at the University of California at Berkeley, Garman noted the huge difference in real estate costs between starting a new company in Pleasanton instead of San Francisco, Menlo Park, or even Oakland.
"You don't have to move to Austin or Portland to be in a place where you can actually grow your company and fund it," Garman told the students. "You can be in the Tri-Valley where so many folks with advanced degrees live because they want to be close to the labs, where they work or do research."
The region's economy shows many signs of strength. As the East Bay Economic Outlook 2019-20 notes, in 2018 the East Bay "had its ninth consecutive year of gains in taxable sales." Last year taxable sales for the region grew to $53.2 billion, an increase of 7.3% over 2017. "Gains were most pronounced in Alameda County, which grew by 7.8%, while Contra Costa County grew by 6.2%," according to the report. "Taxable sales grew more rapidly in the East Bay overall compared with its neighboring counties, including San Francisco (4.1%) and San Mateo (4.0%)."
A significant increase in nonresidential real estate valuations was seen in 2018, with a total of $671.6 million. Last year one subset of that, the value of industrial permits, increased by $282 million. That rise can be attributed to high demand for modern spaces in the East Bay and an infrastructure that supports effective goods movement, according to the report. The importance of goods movement to the region's economy can also be seen in the numbers for exports at the Port of Oakland. The value of exports rose nearly 1.0% over 2017 for a total of $19.79 billion in 2018.
As the report documents, air travel is one sign of East Bay economic growth. Last year 13.6 million passengers used Oakland International Airport, making it the busiest year for passenger traffic at the airport since 2007. Moreover, new routes mean that the airport now supports 67 nonstop destinations, the most in the facility's 91-year history. "These new routes are expected to drive further increases in passenger traffic throughout 2019," according to the report.
Finally, the region's labor force has continued to grow at a healthy pace. Data from the California Employment Development Department shows that between March 2018 and March 2019, the East Bay's labor force grew by 1.4%, or about 17,900 jobs. That was larger than the growth in the labor force for the State of California as a whole during the same period. In short, 2018 was a banner year for the Tri-Valley and 2019 looks promising.
"The Tri-Valley is certainly showing its strength and, if anything, still has a lot of room ahead to continue that trend," says Baiter.
For more information about East Bay Economic Development Alliance or to download a copy of the East Bay Economic Outlook 2019-20 report, please visit www.eastbayeda.org.
For more information about Mirador Capital Partners or to download a copy of The Mirador View 2019 report, please visit www.miradorcp.com.
For more information about Hacienda, please visit www.hacienda.org/project-overview/project-overview.