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Jobs a Concern Going into 2013
December, 2012
by Karl Niehaus, President, CREI
Commercial Overview:
RETAIL HEADING TOWARDS LOWER VACANCY WITH FLAT RENTAL GROWTH: The 66.5-million-square-foot Los Angeles community-neighborhood shopping center market finished 2012 with low vacancy and low rental growth. Net absorption faltered towards the end of the year, but finished positive. We are seeing positive net absorption, along with flat rents. For community-neighborhood shopping center space, the outlook is for modest rent increases to be countered by a generally stable occupancy profile. Once net absorption begins to pull ahead of new construction in 2014, vacancy should take a notable dip.
Economic Overview:
JOBS, WHATS HAPPENED IN 2012? Jobs are, of course, are of prime concern as 2012 winds down and 2013 begins, and the employment news from the U.S. Department of Labor is generally positive. For the 12 months ending in November 2012, total non-farm employment in the Los Angeles metropolitan division increased by 72,500 jobs (1.9%). Construction increased by 2,100 jobs (2.0%), but Manufacturing continues to struggle here, losing 3,600 jobs (1.0%). Wholesale Trade, another employment sector keyed to port activity, was down 700 jobs (0.3%), while Retail Trade employment increased by 13,700 jobs (3.4%). Total Employment in Los Angeles increased by 58,100 jobs (1.5%) in 2012 and is on tap to increase by 43,230 jobs (1.1%) in 2013. Office employment rose by 1.7% in 2012, and is estimated to rise by 12,200 jobs in 2013. These are not hefty gains but Los Angeles continues to gain in population (106,000 in 2012, 96,000 expected in 2013) so it is still a metro that attracts businesses and residents which generates retail needs and services.
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