Economy Perked Along Nicely in 2000

Residential real estate took a big bounce back toward positive territory; entertainment employment grew despite one strike and the looming threat of another, and, oh yeah, we didn’t face Armageddon on New Year’s Day.

Not bad for the first-born child of the new millennium.

Like the rest of the region, the San Fernando Valley had many more positives than negatives in its economic performance during 2000, even with the tech-wreck last spring and the attendant ill health of many Internet companies.

Not that the news was all good.

Late in the year, the Valley lost one of its few Fortune 500 companies when Woodland Hills-based Litton Industries announced that it would be acquired by Century City-based Northrop Grumman Corp. The move was seen as good for the Southern California defense industry, as analysts lauded the strength of the combined company.

But it marks the departure of yet another major corporate headquarters from the Valley.

On the plus side, Woodland Hills-based Health Net, the managed health-care company formerly known as Foundation Health Systems, decided to keep its Valley address.

In October, that Fortune 500 company (it’s No. 201) announced it had signed a 10-year, $100-million lease for space in the LNR Warner Center in Woodland Hills.

With economists, even the more bullish ones, now warning of some sort of economic “landing” (either hard or soft) for the year ahead, 2000 may turn out to be the good old days for some.

With that in mind, we look back at year 2000 major events in the Valley economy.

Home, Steep Home Prices

Some home buyers in the San Fernando Valley experienced major sticker shock this year as prices blew past the old high-water mark of $245,000--set in June 1989--to post a record of $255,000 in August.

For many homeowners, that marked the symbolic end to the real estate recession of the mid-’90s that chipped away at homeowner equity (and confidence) like termites chewing through soft wood.

Prices have inched downward since the summer, but for the year they remain higher than any year since the boom times of the late 1980s and early ‘90s, according to figures from the Southland Regional Assn. of Realtors.

To date, the median single-family home price for the year is about $240,000--on par with the record-setting pace of 1989, when the January-November median was also about $240,000.

That year saw a record annual median of about $237,000, according to the Realtors group.

Even condominiums, normally a more economical alternative, have started picking up heftier price tags.

The median condo price, the price at which half of the units sold for more and half for less, was $147,500 in November, the highest price since September 1992.

And that $147,500 is just a stone’s throw (or 4.3%) from the record monthly condo high of $154,000, set in September 1991.

Early in the year, officials with the regional Realtors association predicted that for 2000, the median price of a single-family home would increase, “conservatively,” by about 5% to 8%.

Looking back, it appears that the increase will be more like 12% to 13%, making this the third consecutive year of double-digit hikes in the annual median.

Leslie Appleton-Young, chief economist of the California Assn. of Realtors, the statewide counterpart to the regional group, has two explanations: timing and geography.

She noted that the economic slowdown began later in the year than experts had predicted. And she said the market in Southern California, including the Valley, continues to outperform the state as a whole, in part because the recovery started later here.

For 2001, “We’re really keeping our ear to the ground,” said Wendy Furth, president-elect of the regional association. She foresees price increases of about 8% to 10% for next year.

That begins to raise questions of affordability, but some of the sting will be blunted by expected dips in interest rates. Stay tuned.

If You Build It, They Will Come

While home buyers were busy snapping up properties in the Valley, developers were diligently snapping up parcels of land to create mega-malls and office complexes to serve them.

One of the region’s biggest developments--Walt Disney Co.’s proposed $2-billion Grand Central Creative Campus in Glendale--moved forward in November when the Glendale City Council unanimously approved an environmental impact report and development agreement for the 125-acre complex.

The campus, on the site of the old Grand Central Air Terminal, will serve as headquarters for Disney’s Imagineering Division, which builds its theme park rides.

Also in the East Valley, construction began in November on the area’s newest power-center-to-be: the 105-acre Burbank Empire Center.

The regional center will include about 900,000 square feet of retail space--mostly big box. It also is slated to include two hotels and 400,000 square feet of office space.

Project developer Ben Reiling, who heads the Zelman Development Co., sees the Burbank center as a draw that will lure shoppers within a 20-mile radius.

“There will not be another center like this nearby,” said Reiling, the third developer to tackle the Burbank project. “It will be a significant regional draw.”

It will, of course, have to compete with existing malls, several of which are planning transformations to sharpen their competitive edge.

The Sherman Oaks Galleria, famed home of the “Valley Girl,” should see a late-summer rebirth next year as a shop-ertainment center and office complex.

The property, near the San Diego and Ventura freeways in Sherman Oaks, will include 700,000 square feet of office space, plus 300,000 square feet of new shops, restaurants and a 16-screen, 4,000-stadium seat Pacific Theatres complex, according to a spokeswoman for project owner Douglas Emmett & Co.

Entertainment Stays Strong

Overall, the entertainment industry--by far the largest employer in the Valley--remained strong during the year, according to industry observers and analysts.

A recent study produced for the Valley Industry and Commerce Assn., showed that Valley employment in the “services” sector, which includes entertainment, grew by nearly 10,000 jobs in 2000.

There were some layoffs in entertainment, with the Walt Disney Co. closing its Art Classics facility in Burbank. That group created collectible animation cells and porcelain figurines. The move resulted in 110 job cuts. In addition, Disney shut down production of the computer-generated feature “Wild Life,” which affected more than 100 artists.

And in September, DreamWorks SKG and Imagine Entertainment pulled the plug on their would-be Internet entertainment site Pop.com before it was ever launched, laying off more than 50 employees.

Despite those setbacks, industry insiders and observers say that overall, it was a fairly good year for the Valley. “The value of the industry to the region continues to rise,” said Kathleen Milnes, senior vice president of the Entertainment Industry Development Corp., which issues film permits and tracks industry-related trends.

Milnes said the agency’s annual report, due out next month, is expected to show employment growth in the Southland and an increase in direct spending, despite the strike by the Screen Actors Guild.

“Our guess is that employment will be up for 2000, partly because there are more ways to distribute entertainment-related products,” she said. “But the question is, how big would the growth have been if other factors had not been in place?”

She cited such factors as the SAG strike and so-called runaway production: “If you brought back all of the movie-of-the-week production from Canada, how much greater would the impact have been?”

Ken Green, a corporate spokesman for Disney, said the company’s employment level in the Valley has been “pretty steady through the year.”

He said the job cuts at Art Classics represented “less than 1% of Disney’s employment in the Valley.”

He declined to state what the Valley employment level is, but industry observers put Disney’s Valley tally at about 10,000 workers.

How the industry will fare next year, especially if there are protracted strikes by screenwriters and actors, is a subject for pundits and perhaps another column.

Meanwhile, take a day or two off, then get back to work.

See you next year.

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Valley@Work runs each Tuesday. Karen Robinson-Jacobs can be reached at Karen.Robinson@latimes.com.