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Appraisal: APN 053-182-030, S.E. Corner of Maple & Lathrop Streets, Redwood City, Calif.Page 12 <br />2025CNA112 <br />The California economy is forecasted to grow at about the same rate as the U.S. <br />in 2025 and 2026, and slightly faster in 2027. The unemployment rate for the first <br />quarter of this year is expected to average 5.5%, and the averages for 2025, 2026 <br />and 2027 are expected to be 5.7%, 5.2% and 4.8%, respectively. <br />B. General Commercial Real Estate Market & Economic Summary <br />According to an April 2025 report by CoStar Group covering the San <br />Francisco area, which includes San Francisco and San Mateo Counties:The San <br />Francisco Bay Area is the global leader in innovation and development of <br />information technology. Home to several of the world s largest companies, <br />including Apple, Alphabet, NVIDIA, and Meta, San Francisco and San Jose lead <br />the nation with the highest economic growth rates at the metropolitan level. This <br />translates into high wages and nation-leading household income growth. In turn, <br />San Francisco has some of the nation s highest rents and prices across all real <br />estate asset classes. <br />However, growth in the technology sector tends to be volatile, with innovation <br />happening in bursts. This does not sit well with the slow-moving world of real <br />estate, with the result that San Francisco's real estate markets have a long history <br />of boom followed by bust, causing volatility in rents, prices, and vacancy. <br />The current boom-bust cycle began with the tech boom of the 2010s, which <br />comprised a significant expansion of cloud computing and mobile technologies. <br />San Francisco was the hub for leading companies that built global businesses <br />around mobile applications that disrupted traditional industries. Real estate <br />demand surged, prompting nation-leading rates of growth in rents and prices and <br />a surge in the construction of office and residential towers in downtown San <br />Francisco. <br />The cycle abruptly turned downwards in early 2020. By then, affordability had <br />become a problem, causing businesses and people to relocate from San Francisco <br />to less expensive parts of the country. The COVID-19 pandemic and associated <br />lockdowns triggered a surge in this exodus. Tech companies adopted distributed <br />workforce models, and employees left the city in large numbers. As of the second <br />quarter of 2025, the population has started to grow again, increasing by an <br />estimated 1.3% in the past year. <br />Starting in 2022, cyclical economic pressures have also been at work after the <br />Fed began raising interest rates to slow the economy and reduce inflation. <br />8.K. - Page 59 of 105 <br />309