Is Tech Slumping, Pausing, or Shifting

The LA Times last week ran an article that tech is slumping as evidenced by declining revenue at Google, Microsoft, Oracle, and Apple.  At the same time Facebook’s stock reaches $40 and Uber raises $258 million on a $3.5 billion valuation. There is a definite shift from PC to mobile.  The article cited the ipad’s slowing sales–but tablet sales in general are still rising.  It does not appear that any other publication picked up on the LA Times story.  You can read thei LA Times article below.


Tech industry slips into a surprising slump – Page 2 –

The Collision of the Great Recession and Echo Boomer Demographics Causes Shifts in the Urban Landscape

In early 2010, we forecasted the following, “the previous expansion was based more on financial innovation and housing wealth accumulation, whereas the next expansion may see a second rebirth of technology and other knowledge-based innovations more similar to the 1990s and further exploitation of the globalization.”

The Great Recession caused many Echo Boomers to forestall household formation by doubling up, staying with parents,  living with roommates, staying single, and remaining childless.  Echo boomers saw housing prices fall.  At the same time,  we all witnessed the birth of the social network, information anywhere and anytime, the rise of search, collaborative consumption, and the new power and dominance of mobile technology via tablets and smartphones.  The economy slowly recovers.  Energy and techology has led the way.  Certain Gen Y’s, especially those in knowledge industries, are getting jobs or promotions and starting new households.

The disparity of wealth accelerated between knowledge workers and non-knowledge workers.  Super knowledge regions grew prosperous while other areas floundered.   Contrast San Francisco with Detroit.

The knowledge working Gen Ys now want to stay connected not only electronically but physically.  They have forestalled marriage and children and pursue their social lives.  This trend has manifest in the desire for walkable and amenity rich cities with  plentiful entertainment, bars, restaurants, strolling streets, and cafes. If they can’t have great private spaces in their homes, they want great public spaces offered in certain cities.   Knowledge workers are now flocking not only into cities within these knowledge super regions but into new neighborhood clusters where they can achieve a real “Social Network.”

San Francisco split by Silicon Valley’s wealth –

The housing activists are complaining that the tech workers are driving up rents and squeezing out “middle class families, small businesses, artists, and intellectuals.”  I guess the tech guys are not intellectuals.  According to Real Facts LLC, the average asking rent of a one bedroom in San Francisco is $2,797 (LA Times. Aug 14 2013, page A8).  According to Enrico Moretti in the New Geography of Jobs–every tech job produces 5 service jobs.  A lot of cities in the United States would like to have a successful tech sector like San Francisco.  It’s too much of a good thing.  You can read the entire article below.

San Francisco split by Silicon Valley’s wealth –

Why San Francisco May Be the New Silicon Valley – Richard Florida – The Atlantic Cities

Another article by Richard Florida  shows the rise of the City of San Francisco as tech hub that shares venture capital funding with the Silicon Valley:

“The sheer number of large clusters of investment in the maps make it clear that venture capital in Bay Area is no longer primarily or predominantly centered in the quintessential techie hub of Silicon Valley. San Francisco has been catching up: The biggest dots by far – indicating the greatest volume and concentration of venture capital activity investment – appear to be in and around the center of San Francisco.”

Florida sees this sharing of money by the suburban Silicon Valley with the urban San Francisco as further evidence of a shift to dense cities versus urban sprawls.  Even within the Silicon Valley, he shows more venture money going to companies in the urban versus suburban parts of the Valley.

However, more interesting is how Florida shows how the two feed off each other to create a mega tech region:

“Of course cities and suburbs are not either/or propositions when it comes to startups, venture capital and high-tech in the Bay Area. If start-ups thrive in dense, diverse urban center cities where talent clusters, serendipity thrives, and services can be found in the surrounding neighborhood, large established companies like Google, Apple and Facebook need the space that their suburban campuses provide. The locational symbiosis is reflected in the shuttle buses these companies have long run between their suburban campuses and downtown San Francisco, where more and more of their workers prefer to live.”

Why San Francisco May Be the New Silicon Valley – Richard Florida – The Atlantic Cities.

Has Marina Del Rey Lost Its Creative Office Mojo? It’s The Cluster, Stupid.

We and other creative office developers started converting warehouses to creative office in Marina Del Rey in the mid 1990’s. The Marina was the next hot creative office area after Santa Monica. Creative companies escaped Santa Monica’s high rents by moving to Marina Del Rey creative office conversions. Most of the activity took place in the industrial area between Lincoln Boulevard and Redwood Avenue and Washington Boulevard and Maxella. At one time,  there was over 1 million square feet of creative office space in the Marina. In early 2001,  the dot com boom turned to bust; many tech companies failed, and vacancies surged. However, it was not the dot com bust that led to MDR’s loss of mojo. It was the housing boom. A land mine in the area’s zoning code allows twice the density for residential than commercial. Thousands of condos and lofts were built in the early and mid 2000’s. Some creative offices were demolished to make way for residential development.   Housing developers would pay a lot more for warehouse properties than creative office renovators would pay. The demolitions and absence of new creative office product caused the cluster of creative office companies to diminish. More exciting product was being developed in Culver City and now in Playa Vista. The MDR area is now called the Loft District or Artist District (there are no artists but just lofts that successful artists may live in). Despite all the rich amenities and growth in residential, the number of creative companies in the Marina has declined over time.  Make no mistake, creative companies like to cluster around each other.   Without a cluster–despite other amenities like restaurants–creative office cannot flourish.