Alex Carrick: San Francisco has the lowest downtown office vacancy rate in the country at 5.7%. Occasionally, there are anomalies in the numbers based on projects that may have started earlier and are still being developed, but aren't counted as new starts in the second quarter. With such a low office vacancy rate, there's going to be office construction. Developers are drawn to a low number like we are seeing now.

Also, some office starts might be captured in residential projects because you can have mixed-use projects that are categorized as residential that include a big office component as well as condos. Some of the office starts might be hidden in mixed use projects (and classification might be off).

GlobeSt.com: How does the decline of institutional starts factor into all of the other indicators of prosperity?

Carrick: There's a lot of variability in this information depending on whether a project goes ahead in any given time frame. San Francisco is doing great and Institutional starts will eventually follow. Surprisingly, compared to other major US cities, California is near the bottom in terms of education and health employment. This might be because there is more concentration on the high-tech sector and mixed-use projects, instead of construction and increases in employments in these areas, but it's hard to be certain. It may be that that's already happened. San Francisco may have already spent a lot of money in those areas so the growth isn't as strong, but I wouldn't read much into this slight decline.

GlobeSt.com: What sector did declining oil prices impact the most?

Carrick: Not sure it's had much of an impact, except that it's giving San Francisco an advantage over Houston in terms of the race between the two cities for the number one urban economy.

GlobeSt.com: Any additional insights about San Francisco construction?

Carrick: Because of the recent California drought, construction throughout the state is geared more towards water conservation–the rest of the country has been into energy conservation–however, this implies energy conservation to an extent because some power is generated through hydro projects.

Also, I'm finding when I look at projects, the Bay Area is more interested in setting architectural trends. For example, Google has the Mountain View, CA campus under construction and Apple has the spaceship project in Cupertino, CA. Because of San Francisco's focus on high tech, we're often seeing cutting-edge architectural design coming from the region.

As for possible speedbumps ahead, Chinese money might not be as available because China's economy isn't doing as well and the Yuan is being slightly devalued.

With oil prices in a slump, the high-tech sector has assumed the mantel of growth leader among US industries. San Francisco is first among major American cities according to numerous yardsticks on the economy, including labor markets, housing prices and construction starts. In summary, it's a great time to be conducting business and undertaking capital investments along the San Francisco to San Jose corridor.

Another outlook on construction starts was previously reported earlier this spring.