SAN FRANCISCO—“There are industries at the cusp of technological change—including education that will certainly be greatly affected by electronic distribution of content. San Francisco and the Bay Area will be at the forefront of all of these new advances.” That is according to Ken Rosen, chairman of Rosen Consulting Group and chairman of the Fisher center for Real Estate and Urban Economics, at a recent Cushman & Wakefield economic presentation held last week at the Four Seasons Hotel.

In attendance were nearly 500 people, including Joe Cook, Cushman & Wakefield's COO of US Markets, John Cushman III, co-chairman of Cushman & Wakefield's coard and a crowd of primarily commercial real estate professionals from all corners of Northern California.

Cook began the breakfast meeting with a warm welcome and a brief introduction. Cook spoke of the “unprecedented velocity of growth we are currently experiencing in the Bay Area.” The market is “red hot and on fire,” said Cook.

Rosen spoke on a number of different economic and real estate topics including unemployment rates across different educational and age levels, the improving US Budget deficit, and a decline in oil prices, low interest rates and the increasingly confident American consumer. In speaking about San Francisco and the Bay Area's economy, he addressed the question of whether this is a bubble or not.

Today's technology expansion, he said, is much more broad-based than the previous “tech boom” during the late 90s. Today's firms have real business—and consumer-based products across many different segments—whether social media, cloud, retail or health care.

He also said that there is no doubt that there will be some start-ups and mature companies that will run into growth difficulties—whether they have previously expanded with private or public funding. This is the natural business cycle and should not cause too much alarm as we are not expecting a sharp downturn such as the implosion seen in 2000.

Despite all the good news, Rosen still noted some risks in the Bay Area, including the rising cost of living and higher costs of doing business.

“Inflation has been a factor in the Bay Area unlike much of the rest of the country,” Rosen said. “Housing costs have skyrocketed even as new apartment construction has reached record levels.”

According to Rosen, there is a manifest income/class disparity that must be addressed. Another risk to the continued growth, he added, is the threat of “bumping up” against the Prop M caps of office construction within the next few years.

Additionally, he said, “the California tax structure can be problematic and should be revisited by the state government—this issue alone could threaten corporate expansion in the Bay Area. All of these issues add up to the possibility that firms will look elsewhere to expand when necessary—essentially searching for locations with a lower cost of living and a lower cost of doing business—as long as the talent either exists in place at those locations or employees in the Bay Area are willing to relocate.”

It is likely the current cycle will last another two to three years before an economic correction takes place, noted Rosen. “However, it will not be severe enough to put the local economy into recession.”