California Economic Outlook for 2014: Prognosis Positive

Millennials rule. At least in Downtown Los Angeles, where the median age of residents is 34 and the median age of visitors tops out at a mere 36 years old.

A prestigious panel of experts took a peek under the hood to unveil the latest economic statistics at the Downtown Breakfast Club Annual Jack Kyser Economic Outlook, held in January at the venerable California Club. Their findings struck a positive note, with long term indicators notably upbeat.

California Club

Established in 1887, the California Club for generations has been the gathering place for business, industry and government leaders.

Dr. Robert Kleinhenz, chief economist of the Los Angeles Economic Development Corporation, stated California’s economy–expressed in Gross State Product in inflation-adjusted terms–should grow as fast or faster than the projection for the nation: 2.8 percent and that 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.

Hal Bastian, executive vice president and director of economic development said in a Q & A session, “The Downtown Los Angeles 2013 Year-End Market Report, conducted by the Downtown Center Business Improvement District (DCBID), indicates positive and sustainable trends.”

DTLA skyline

Dramatic view of Downtown LA skyline

The growing Downtown population of 52,400 is highly educated and affluent, with a median household income of $98,700 and a median age of 34. Downtown Los Angeles employs over 500,000 people, with a median income of 98,020 and median age of 39. In addition, over 10 million people visit Los Angeles, with a median income of $90,580 and median age of 36.

Based on nearly 9,000 responses from Downtown residents, workers and visitors, 76% of total respondents have earned a four-year undergraduate or graduate/post-graduate degree. 56% of residents also work in Downtown Los Angeles, with almost 55% in Top Management, 20% in Law, Accounting, Advertising, and 17% in Arts & Entertainment. “This influx will drive the Los Angeles economy in the coming decades,” Bastian noted.

So what does all this mean? Behind the dry data seethes a young, vibrant demogrpahic hungry for the urban experience–restaurants, cultural institutions, nightlife, parks, and public transportation–all the amenities one would expect to find in a major city.

LA Central Library Park

Central Library park provides relaxing respite

Kleinhenz also cited that home prices will continue to rise, albeit more modestly than in 2013, fueled mainly by steady demand bumping up against low inventories.

Sounds like Los Angeles needs housing–and lots of it.

Steven Marcussen, managing director, Cushman& Wakefield, pointed out that many office buildings are being repurposed for residential and mixed use. Companies are using less office space for a variety of reasons, including new technology which requires fewer workers and the ongoing trend of corporate downsizing. Loft apartments, Live Work units, and creative studios are replacing old school, large footprint office spaces.

panelists

Participants in The Downtown Breakfast Club’s Annual Jack Kyser Economic Outlook Jan. 23 at the California Club included (from left) Dr. Robert Kleinhenz, chief economist, Los Angeles Economic Development Corporation; Steven Marcussen, managing director, Cushman& Wakefield; Christopher Sheldon, chief investment officer, Fidelity Investments’ Private Wealth Services Group; N. Richard Lewis, president, Lewis & Associates, moderator; and Charles Muttillo, president, Morley Construction, and president of The Downtown Breakfast Club.

 

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