When's the Next Recession?

This morning, a packed room of Cushman & Wakefield employees heard the news--another potential downturn--from Rosen Consulting Group chair Ken Rosen at the Four Seasons.

We have two to three more years before an "inevitable correction," the economist says, and he thinks the big worry for S.F. is we've become all tech. Compared to the dot-com era of startups destined for failure, this time there's luckily a diverse mix of social media, software and HR. The weakness in S.F. is the capital markets being the lifeblood of new entities we have. Robust capital markets pushed up values of stock, and capital raising is being used to add employees and buy companies. If there's a big correction in the capital markets, he expects a slowdown. (Though not like 2001.)

During the next wave of building, we're going to face the Prop M ceiling, which adds just 875k SF of large office space to the city limit each year. Ken's worried it could constrain our growth as the center of tech, as some companies might have to go outside of the Bay Area. And there's still a shortage of housing to keep up with job growth. (Ken is a proud renter of an apartment next to Twitter--his son is the tenant while attending law school nearby at UC Hastings.) Rents in newer buildings are running $3,500 to $4,000 a month or more for a one bedroom. That means a lot of demand here is subsidized by parents, he says. "A lot of you know that," he laughs.