Ah, the resilience of the Los Angeles economy.  Although California was, perhaps, the state hit hardest by the current housing crisis, Los Angeles bounces back above the rest of the state and other big cities throughout the country, with an overall economic resurgence that places it in ninth place for all American cities. 

The factors considered for this ranking are 

·        unemployment rate
·       job growth
·       expectations for continued job growth
·      positive change in median sale price for single-family homes
·        metropolitan gross domestic product 

Los Angeles has strong banking and finance industries and a housing market that, while it suffered a major pricing bubble and burst, has seen an increase in demand.  After falling to a median $311,100 in the second quarter of 2009, home sale prices jumped 11% in the third quarter and another 2% between the third and fourth quarter of 2009 to a median of $342,700, according to the National Association of Realtors, making Los Angeles number four in sales price improvement for all U.S. metropolitan cities. 

Part of L.A.’s dramatic rise is due to the fact that our real estate woes began earlier and were more pronounced than most of the country, so our easing began a little sooner.  Some of the economic reasons for this recovery are the evergreen industries that comprise our city… industries like government, defense, education and technology – sectors that will always provide work, even in a national slump.  Our industry diversity, a business infrastructure not solely invested in one industry, gives us a healthy, resilient economy and very good prospects for the future.

While 2009 has been a year most would like to forget, the question on seemingly everyone’s mind as the year draws to a close is what 2010 will hold in store? There has been incessant talk about if and when in the coming year the commercial shoe will drop. Another popular subject is the possibility of a double dip in the recession.Regardless, the key word for 2010 will be Opportunity. Having just seen Sherlock Holmes one of the lines that stood out was when Holmes explained to the chief of police that, “You seem to never miss an opportunity to miss an opportunity.” This is worth keeping in mind as the new year commences. Opportunity currently and will continue to exist in urban centers in many forms. Development as we knew it, as in suburban sprawl, is dead. However, a restored focus on urban infill has come to the forefront of significance for projects moving forward. The buzz words these days include transit-oriented development, green building and mixed-use. Urban centers where the words commute and traffic become arcane notions, will certainly improve the quality of life for all those who choose its path. Reduction in pollution and energy costs and increases in efficiency all seem to make sense given the position where our economy and ultimately our planet seem to be at the current time.
The major markets have been slammed but should be the first to recover. Hotels can be picked up on the cheap as many of the adjustable rate mortgages come due or become to great a strain for the debt coverage to bear. Infill land, purchased with development dream dollars and now facing a high interest rate and no offsetting income reality, will be a longer term pick-up but should at the very least provide a cheaper and safe investment for the longer term.  Industrial property in urban centers is attractive for either owner users, investors with a user or for adaptive reuse for multiple uses. These represent just a few of the possibilities out there.

It looks as if 2010 will force us all to get back to the basics. Presently, liquidity remains key, yet missing out on opportunity in the here and now will come with the same feelings we are experiencing as it relates to why we bought what we bought at the peak of the market or why we didn’t sell when we could have sold at the peak. The zenith is past us yet we seem to be closely approaching the nadir (if not already there). This opportunity won’t last forever nor will our downtrodden economy. Whether or not a 2010 recovery is imminent probably no one knows. Yet there is no question that 2010 Opportunity is present and waiting to be accounted for.

As the Los Angeles economy rebounds from a rough year and a half of uncertainty we see new hope, new obstacles and yet more uncertainty.  With the collapse of many giant companies and an excess of available retail real estate we are seeing foreign companies that have had success in the recent past taking a chance in the US market.  As these new companies bring their goods to the Los Angeles market we see the potential for new jobs and increased consumer spending.  The entertainment industry appears to be picking the pace up now that the strikes they have faced for the last two years appear to be behind them opening the potential for more jobs and more studio spending which makes up a large portion of the LA economy.  While we are seeing these great improvements we are also dealing with new obstacles such as a water shortage.  With California financially strapped the ability to purchase out of state water is not as easy, we have been forced to reduce consumption and water our lawns on certain days and hours.  There appears to be a lot of change going on in the LA area, but what we are unsure of is what is really changing and if it is for the better or worse.  Unemployment remains higher than in recent history, real estate appears to have leveled out, the state of California can’t balance their budget and the average business man is unsure if they should grow their business or shut it down.  The bottom line is don’t give up.  The economy is turning around, even if it is slower than you may have hoped for.

News was recently released that the Screen Actors Guild has tentatively come to an agreement with the studios.  The last two years the entertainment industry has been in a holding pattern with the Writers Strike and SAG operating without a contract for roughly the last year under the constant threat of a work stoppage.  Well, Friday good new came across the news wires, or so we thought.  SAG and the studios reached a tentative two year deal, but the union president swears to oppose the deal.  The new agreement is not far from what the Writers negotiated over a year ago, something SAG could have taken long ago and kept the industry moving along in this rough economy.  I don’t see how actors could turn this agreement down with the economic climate in Los Angeles today.  Actor’s should be excited about the potential of more production work.  Should everything pass we could see the benefits across the Los Angeles area with camera operators, editors, caterers, location companies, make-up artists and more getting more work the Los Angeles economy could turn off of this one change.  I know it’s a lot to wish for, but who ever said positive thinking was a bad thing?

I just read an article on the NY Times Blog that made me realize how hard hit the entertainment industry has been with the recent economic woes.  Film Locations in the city of Los Angeles are at their lowest rates in over 16 years.  With an entertainer as the governor of California how can we not be supporting an entertainment stimulus package similar to what Canada, Detroit and other cities competing for filming have done.  Their are tax incentives in many cities to promote the use of locations throughout the United States, why does Los Angeles and the great state of California not push something through to keep their prime business in their own district boundaries.  Michigan would fight if the auto industry threatened to leave Detroit, North Carolina has its claim on the tobacco industry and Los Angeles has the glitz and glamour of Hollywood and the television and film industries.  As a long time resident of Los Angeles as well as a part of a business that relies on film companies working on their productions in Los Angeles and production companies renting office space it is a shame to see that we have allowed other cities to take our business away without a fight.