Los Angeles Business Journal Hosts 2020 Economic Trends and Forecast Event
Last month, a panel of regional business experts presented their predictions for Los Angeles on trade & tariffs, taxation, impact of new legislation and real estate. Here are my key take-aways from the event.
No Meaningful Impact of Trade War and Tariffs on Los Angeles Economy
During the Trade, Tariffs & Taxation Panel, Moderator Akash Sehgal of Green Hasson Jenks guided panelists Young Cho of Enterprise Marketing Analytics Group and Claudia Lin Margolis of Lockton Insurance Brokers as they agreed LA’s economy is strong, despite the impact from tariffs. Cho writes:
“With deeper ties to Asia, Los Angeles is exposed to greater levels of economic uncertainties arising from the trade tension and slower global growth. Indeed, the ongoing Trade War has weighed on cargo volumes through the Los Angeles and Long Beach ports, the nation’s busiest ports for transpacific trade. In November 2019, total imports at the two ports dropped 11.3% year-over-year and total exports shrunk by 7.1%…. While employment growth continued to be widespread among many sectors, we should note that the jobs involving trade and transportation grew by 6,100, keeping the falling trade volume in perspective. Due to the robust hiring demand, the unemployment rate in Los Angeles registered at 4.4% in November, down from 4.7% one year ago.”
Panelists also concur that worries of a US recession are overblown, although the economy could slow from 2019, “People are talking about a recession because they expect one in a 10-year cycle, but the US economy is flying high—we are not at risk of a recession.”
2020 Will Be a Strong Year for Los Angeles Real Estate
The four-member Real Estate Panel included moderator Jim Cruse of DPI Retail along with panelists Laurie Lustig-Bower of CBRE, Paul Rahimian of Parkview Financial, and James Malone of Colliers International.
Real estate experts agree that 2020 is not the year of the recession. In fact, all look forward to a strong year and enjoyed a robust fourth quarter.
Multifamily growth emerged as a theme for 2020 and beyond, with pricing for apartment properties at record highs. Vacancy rates are expected to be around 3.5%– constant, but with increasing rents. Low vacancy and increasing rents are predicted for the next five years, encouraging investment in apartments. Strong values are expected despite the CA regulations limiting rent increases for buildings 16+ years old to 5% plus CPI.
Development is also expected to be strong in 2020, with Parkview Financial sharing they had 4,500 construction loan requests in 2019.
It’s encouraging that LA business experts are optimistic about the coming year’s economic opportunity, even with the impact of tariffs and new regulations.
