The South Bay Economy: What to Know for Business Success in 2024

Bridge Bank is the presenting sponsor of the San José State University Economic Summit, an annual event that brings together business and community leaders in the South Bay and Silicon Valley to gain insight into how the current economic landscape may affect business.

Here, we share key outtakes from the 2024 South Bay Regional Intelligence Report, which reveals that employment is strong and wages have grown, but consumer spending has retreated from recent highs. To discuss how your business can succeed in any economic climate, please reach out to your Bridge Bank relationship manager — we are always here to help.

Interest rates and VC investment

High interest rates impact venture capital (VC) investments across the U.S., and Silicon Valley is no exception. Total capital raised in the region declined by 16.8% to $53.9 billion in 2023. The decrease is less dramatic than the 34.6% drop the U.S., as a whole, experienced.

Employment and labor

The South Bay labor market is resilient despite recent tech-sector layoffs. Employment here grew by 0.2%, or 2,100 workers, even as employment in the region’s tech industry dropped by 3.4% over the last year. The region’s decline in tech employment was less than California’s, which saw a 4.3% drop. In the U.S., as a whole, tech employment grew by 0.5%.

Wages in the South Bay grew 3.9% to $159,767 from Q3 2022 to Q3 2023. The information sector saw the most robust wage growth at 13.7%, followed by manufacturing at 11.4%; trade, transportation and utilities at 4.1%; natural resources and construction at 4%; professional and business services at 2.1%; and other services at 0.1%.

Residential and commercial real estate

With mortgage rates remaining high and limited housing stock, home sales continue to decline. However, prices continue to rise and are well above pre-pandemic levels. The lack of housing availability harms business and job growth across California.

Reduced demand in the South Bay office market, particularly in the technology sector, pushed vacancies up 1.4% to 21.8% in the first quarter of 2024. That’s higher than San Francisco, which reported a 19.9% vacancy rate, and the East Bay, at 18.5%.

To learn more, download a copy of the South Bay Regional Intelligence Report.