Valley Economy Generally Robust in 1999
More than $4 billion in home sales, an expansion-minded Mouse and a well-publicized flap at a business assistance agency. Those were among the biggest San Fernando Valley business news stories in 1999--a year that defies easy definition.
While overall the news was pretty good, some things--most notably a lack of land for future development--shaped up as major business headaches that promise to be with us when the new year dawns.
It’s hard to sum up an entire year of commerce in one column, but there are some events that stand out. Here is a look back at some of the biggest blips on the business radar screen in 1999, accompanied by a bit of forward thinking.
* No. 1: It’s the economy, silly. (Stupid sounds so harsh.)
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By a multitude of measures, the San Fernando Valley economy--rocked to its socks earlier in the decade by manufacturing downsizing and a tectonic shift--is off the canvas now and punching back.
Nowhere is the impact of the economic rebound more visible than in the Valley’s real estate market.
For the first time since 1989--a boom year--the Valley is poised to sell more than $4 billion in single-family homes and condos, according to Jim Link, executive vice president of the Southland Regional Assn. of Realtors.
In addition, local housing values are expected to end the year at their highest levels since 1992--$222,000 as a median price for a single-family home.
“The continued demand for housing in the Valley and the appreciation of prices has put the Valley back as one of the premier, desirable places to live,” Link said.
And Link predicts more of the same for 2000, even if the Fed does nudge up interest rates a tad.
“A small bump in interest rates will not cool this market,” Link said. “I have not heard anything that would indicate that it’s going to be such a sharp rise that it will grind the real estate market to a halt.”
And the attention to real estate isn’t limited to home sales.
The number of construction permits for upgrades to Valley residential properties rose 30% between June 1998 and June 1999, to 8,379 permits valued at $127.4 million.
“It really is mind-boggling,” said Bonny Herman, president of the Valley Industry & Commerce Assn. “When you drive around the neighborhoods, you can see the improvements to the homes. People are paving driveways where there’s been dirt for 10 years.”
* No. 2: Beam me into cyberspace, Scotty.
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If you think cyber-commerce and e-shopping are just passing fads, join the group of naysayers still waiting for talkies to fade to black.
This holiday season, Internet sales were expected to account for $6 billion to $12 billion of an expected $185 billion in total sales.
A growing number of Valley merchants warmed to the idea of online selling this year, with everyone from barbecue joints to workout salons now doing the cyber-hustle. Look for that trend to pick up steam in 2000.
“I saw everybody else going for it and I just decided to follow, to be honest with you,” said Taiwan native Ted Ma, who last month launched a Web site for his 22-year-old Tarzana restaurant, the El Paso Barbeque Co.
Ma is not sure whether the site has generated any new business yet.
“I haven’t had any customer say, ‘Hey, I saw your ad on the Internet,’ ” he said.
Still, he’s determined to stick with it, at least for the short haul.
“We will stay with it for a whole year and see what happens. This is the new thing, and I’ve got to try it.”
* No. 3: Oh give me land, lots of land under starry skies above...
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You’d think that with nearly 290 square miles of land in the San Fernando Valley (stretching from Glendale to Calabasas) there’d be plenty of space for all types of development: industrial, residential, academic.
But the mostly built-out Valley is now in the midst of a space crunch.
During the year, the San Fernando Valley lost out on some major economic developments, most notably Lowe’s Cos., the nation’s second-largest home improvement retailer, which in May announced plans to build a 150,000-square-foot warehouse superstore on 13 acres of vacant land in Palmdale. The East Coast-based chain typically seeks 12 to 15 contiguous acres for its stores.
Try finding that in the chock-a-block San Fernando Valley.
The business effects of this worsening space crunch became abundantly clear in September. At that time, the Los Angeles Unified School District, urgently trying to find a site for a high school to relieve overcrowding, zeroed in on a square 24.7-acre parcel in North Hollywood.
Only problem was, there’s already a business on it. And a fairly successful one at that.
After business leaders and many community members balked at district efforts to move the Robinsons-May Department Store, and the chain’s corporate headquarters, the district backed down, sort of.
Earlier this month, district officials announced that part of the site, which they call “golden” is still being considered as the future home for a school for students in kindergarten through third grade.
That Robinsons-May is not completely off the block is a sure sign that the region’s business community needs to be more actively involved next year in dealing with the dearth of available dirt.
* No. 4: The Mouse spreads out.
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If you happen to own the land already, expansion is so much easier.
In early September, the Walt Disney Co. announced plans for a major new office complex in Glendale, a “creative campus” that would eventually include office space, sound stages and a high-tech business center.
The project is to be built on the 113-acre site of the former Grand Central Air Terminal, which was purchased by Disney in 1997. Disney has had its Imagineering division--the people who design the theme-park rides--on part of the site since the early 1960s.
David Fleming, chairman of the Economic Alliance of the San Fernando Valley, said the project would not have come to pass without the state Transportation Commission’s approval of improvements to the on- and off-ramps of the Golden State Freeway, near the development site.
“That made this possible,” said Fleming, whose organization has tried to foster stronger ties with the growing entertainment community in the Valley. “We got the government and private sector working together to accomplish something.”
The project is far from the construction phase, with the environmental review beginning just a few weeks ago.
But already, local business leaders are looking down the line and seeing a big employment boost associated with the forthcoming development.
“This is a project that’s going to involve thousands of jobs,” Fleming said.
* No. 5: The Valley Economic Development Center
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The bad news: An ugly leadership spat developed at one of the Valley’s key business agencies, and when the dust settled, the president, board chairman and several board members were out the door.
The agency is the Valley Economic Development Center, a Van Nuys-based nonprofit that (among other things) provides government-funded loans to small businesses.
The debate, which sources on both sides said was, in part, personal, bubbled up over fees paid to then-President John Rooney and a staff consultant who brokered a deal to get private investment funds for a Canoga Park sign maker. Questions also were raised about a deal in which David Honda, then board chairman, accepted a contracting job from a business that had received a VEDC loan.
The good news: Last month, officials revealed that a draft audit by the city of Los Angeles found no financial irregularities. Now, according to interim President Roberto Barragan, the agency is looking to rebuild.
“The board will meet in January to reconstitute itself,” said Barragan, referring to the effort to replenish the ranks of the board, which thinned considerably over the summer as the flap escalated.
Barragan said the board may add as many as 10 new members to its current roster of nine. He said, once the results of the city audit were made public, board members had little trouble convincing other local business leaders to sign on.
“With the audit being finalized as clean, no one had an issue,” said Barragan, who hopes to drop the word “interim” from his title.
Now, Barragan said, his goal for 2000 is to work with the board to help craft new operating procedures and to work with staff “to develop a strategic plan for the VEDC going forward for the next three years.”
We wish them luck. The Valley business community needs all of its support agencies focused and functional if the economy is to continue to recover. And once the Y2K glitches are solved, it’ll be time for everyone to get back to work.
Happy New Year.
Valley@Work runs each Tuesday. Karen Robinson-Jacobs can be reached at Karen.Robinson@latimes.com.
