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We're Golden Through 2021

San Francisco Office

Real estate economist Larry Souza has a theory on when the next recession will hit.

Larry, center, doesn't see anything that will fundamentally shock the system in the next few years in S.F. There are a lot of big space requirements out there, with about 2M SF of net rentable space that'll deliver around 2016. And 4,000 multifamily units debuting at the same time will be easily absorbed from new jobs. You will see another 4,000 to 6,000 units being delivered from 2017 to 2020, he says. He was speaking at an investment forum at Bryan Cave's offices. Above, the firm's Jim Goldberg and First American Exchange's Alaine Raven.

Job creation is on overdrive in the Bay Area, Larry says. From September 2013 to September 2014, San Jose employment went up 3.5% (34,000 jobs created); 3.7% in S.F. (40,000 jobs); and 2% in Oakland (21,000 jobs). That's the biggest growth in jobs numbers we've seen since the late '90s, he says. Our region also faces the fastest expanding economies in the world: Tokyo, Guangzhou, Singapore and Hong Kong. That means S.F., Seattle and LA will be beneficiaries of Asia's velocity of human and physical capital, he says.

Larry doesn't see any major moves in interest rates over the next two years, but by 2018 he thinks there might be a significant slowdown in the economy; the US will deal with funding of entitlement programs for Baby Boomers (specifically Social Security and Medicaid), putting public pressures on interest rates. History tells us that the first five years of every decade deal with a downturn (90% of the time), so expect another big one in 2021 to 2023. (Good luck, President Malia Obama.)