California’s economy – expressed in Gross State Product in inflation-adjusted terms – should grow as fast or faster than the 2.8% projected for the nation, according to Dr. Robert A. Kleinhenz, chief economist of the Los Angeles County Economic Development Corporation. And DTLA’s future is downright bullish.
“The biggest gains in Southern California will come from the leisure and hospitality sectors, supplemented by sizable gains in professional and business services and construction,” stated Dr. Kleinhenz. Addressing The Downtown Breakfast’s Club annual Jack Kyser Economic Outlook on January 23, Kleinhenz said the state’s economy will accelerate, led by the tech sector in the Silicon Valley and Bay area, and the California economy also will benefit from a better fiscal situation in the state.
Locally, downtown should thrive, added Steve Marcussen, a managing director of Cushman& Wakefield. “Downtown is underserved for the residential, retail and hospitality sectors,” he said. Just in 2013, noted Marcussen, over $500 million was expended in land sales in those sectors.
Most industries in Los Angeles County added jobs last year, with more to follow in 2014. However, Kleinhenz observed that the county’s unemployment rate remains high and a normal rate is still at least a year away. A continued decline in manufacturing employment is anticipated as technology results in greater efficiency, but the value of output should stay level or increase with improvement in the overall economy, Kleinhenz said.
He also noted that brick and mortar retail might be flat as a result of increased consumer online shopping. Home prices will continue to rise, he said, but not at the 20% rate they grew in 2013. Increases this year will be fueled mainly by steady demand bumping up against low inventories. Vacancies in Industrial properties will continue at low single digit rates, while occupancy in commercial office space will see modest improvement, he added.