Valley Economy Still Robust, Study Says
For the second consecutive year, the San Fernando Valley’s economy has turned in a robust performance based on new jobs, payroll, building permits and other measures, according to a comprehensive report from the San Fernando Valley Economic Research Center at Cal State Northridge.
The report, in its second year, shows that private-sector payroll rose more than 9%--to $23.8 billion--from 1997 to 1998. The number of private-sector jobs rose to about 630,000, and construction permits for repairs and remodeling showed increased activity in nearly every category.
The report, scheduled to be released at today’s 11th annual Business Forecast Conference of the Valley Industry & Commerce Assn., indicates that by nearly every measure, the Valley economy is continuing to recover from the one-two punch of the early ‘90s recession and the 1994 Northridge earthquake.
“Overall, it’s a positive report,” said Shirley Svorny, director of the center and author of the report. “It looks like we’re coming along. We’re observing an economy that’s showing signs of strength consistent with the regional recovery.”
Last year’s report also pointed to an economic rebound in the Valley area.
By reviewing existing data from a variety of sources, including the state Employment Development Department, state Department of Finance, city of Los Angeles and commercial data suppliers, the research center created a 66-page snapshot of a diverse Valley region that stretches from Glendale to Calabasas to Sylmar.
The report confirms that the Valley remains a service-based economy, with 45% of the jobs falling into that category--by far the largest single sector. More than a third of the “service” jobs are in the entertainment industry, according to the report.
Using a broad definition of entertainment, ranging from periodicals to movie production, the industry in the Valley region employs 92,358 workers, with an annual payroll of $5.52 billion.
The Valley is home to nearly 37% of the jobs in movie and television production, according to figures from Morrie Goldman, a spokesman for the Entertainment Industry Development Corp., the Los Angeles film office.
The highest-paid Valley workers, with an average annual paycheck of $50,000, were in the category of finance, real estate and insurance, even though that category incurred a 2.4% dip in employment between 1997 and 1998. The lowest-paid workers were in retailing, where annual salaries averaged just under $20,000.
The report is not designed to be a forecasting tool, Svorny said, because the center has not yet amassed enough data that would show clear trends over time. University officials have said they hope the center will eventually be able to make accurate projections on the area’s economy.
In the meantime, the report does offer a comprehensive look at everything from apartment vacancies (below 4%) to exports (mostly food, and mostly to Japan).
“There is growth,” Svorny said. “You see it in each of the numbers. Housing prices are up, which indicates that people are wealthier so they can bid up prices. Payroll is up 9%. Unemployment claims have declined. That’s a really good sign.”
On some demographic measures, the Valley did show signs the prosperity is not uniformly held by all.
For instance, estimates from the Los Angeles County Urban Research Department showed that 16.6% of the Valley region’s 1.6 million residents in 1997 lived in poverty (using federal poverty guidelines). That’s up from 11% of the Valley population in the 1990 census, but still below the 20.3% countywide figure.
“This does suggest a really dramatic increase,” Svorny said. “I think it’s a big increment.”
Martin Cooper, head of Woodland Hills-based Cooper Communication Inc., sees the increased poverty figures as a sign the Valley, while celebrating its fiscal gains, needs to make certain that “everyone has a shot at being economically successful.”
“That’s one thing that struck me the most,” said Cooper, who chairs the Valley Industry and Commerce Assn. committee hosting today’s sold-out business conference at the Warner Center Marriott Hotel.
“There’s growing diversity and yet at the same time, the aggregation of wealth in certain areas should force us to say, ‘Is everyone getting their fair share of this American dream concept?’ ”
Other demographic figures in the report suggest a separate Valley city would not be the white suburban enclave that some critics of the ongoing breakaway movement have contended.
Estimates from the Urban Research Department paint a picture of a Valley region with a majority nonwhite population.
Using information from birth and death certificates and searching for Latino surnames on Department of Motor Vehicle records, the Urban Research Department estimated 52% of Valley residents in 1997 were Hispanic, Asian or African American. The department gave the percentage of white residents as 48.
The report also demonstrates the continued rebound in the region’s real estate market, both for commercial and residential properties. For the Valley region, apartment vacancies in July were at a 15-year low. Northridge, for instance, posted a scant 3.2% vacancy rate contrasted with 45.4% immediately after the Northridge earthquake.
The overall office vacancy rate for the first half of 1999 was pegged at about 10%, down from 18% in 1991.
While new construction activity in the built-out Valley region appears to be leveling off, the number and dollar value of permits for alterations and additions increased between June 1998 and June 1999 in nearly every category.
Valley residential property owners were planning $127.4 million in remodeling work in June, up 20% from the $106 million in June 1998. By comparison, the value of permits for new homes dropped by 27%, from $307.8 million last year to $223.9 million this year.
“As you become more built-up, you can’t expect the same kind of [new] construction,” Svorny said. “You have to turn to other measures of well-being.”
One measure that has heartened real estate brokers and homeowners alike is the continuing rise in Valley property values.
The report lists the median sale price in July 1999 for a home in the Valley region--including new, resale, single-family and condominiums--as about $220,000, higher than the countywide mark of $191,000.
Using a slightly different measure--the average price--researchers with Anaheim-based First American Real Estate Solutions came to similar conclusions.
Nima Nattagh, research director for First American, said even though the Westside and coastal areas have shown more strength in the real estate market in recent years, the Valley is gaining ground.
“It appears that the recovery has finally caught up with the Valley,” Nattagh said. “The Valley really represents activity that’s in line with the average for L.A. County.”
While some measures, such as the Valley’s share of unemployment claims and bankruptcy filings in the county, are up somewhat, Svorny views the report overall as favorable.
“The data confirm we’re experiencing continued economic expansion,” Svorny said. “It appears there is nothing standing in the way of future recovery.”
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Construction Permits
New residential, office and retail construction dipped from 1997-98 to
1998-99, but industrial construction was up.
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Source: San Fernando Valley Economic Research Center
Payroll, Jobs Trends
Almost across the board, private sector payroll and employment are up in the Valley region. *
Source: San Fernando Valley Economic Research Center
Where the Jobs Are
Employment in the San Fernando Valley region (including Burbank, Universal City and parts of Los Angeles). Figures as of Sept. 30, 1998 show the region continues to have a service-based economy.
