Latest Commercial Real Estate Market News & Investment Advice in Los Angeles

Economy In Longest Expansion In History

February, 2020
by Karl Niehaus, President, CREI

Commercial Overview:

RETAIL IS GOOD & BAD. Retail sales data from December increased 5.8% year over year, which is promising and up from 3.3% in November. Online spending played a key role to the disadvantage of brick-and-mortar sales and, in particular, the detriment of big box tenants (as shown by the graph). The rising tide of strong consumer spending still negatively affected many retail businesses, but the survivors seem to be rising quite well.

Economic Overview:  

ECONOMY IN LONGEST EXPANSION IN HISTORY, despite dour headlines. California’s economy continues to grow steadily, hitting significant milestones in the last quarter. The state’s unemployment rate has dipped to a historically low 3.9% as both worker wages and employment have reached all-time highs. Despite growing at a slower annual pace in October 2019 than California’s other major metropolitan areas, LA County continues to add jobs to its massive employment base. Additionally, multifamily construction activity in the region continues to progress above trend, while the single-family construction market remains leaden. The nation’s housing market is starting to recover due to falling interest rates. New and existing home sales are up and home price appreciation is beginning to accelerate. Moreover, none of the conditions for a major housing bust are present.

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