OC Poised for Continued Economic Expansion
Tuesday, December 17, 2019
By Bryan Starr, president and CEO, Greater Irvine Chamber, as published in the Orange County Business Journal.
While a historic “handshake” agreement has been made on the United States-Mexico-Canada Agreement, volatile national politics still make for sensational headlines and paint a picture of economic uncertainty. Yet, the nation continues to experience economic vitality, and California and Irvine continue to be well-poised for economic stability and growth.
Expert economist and founding partner of Beacon Economics, Chris Thornberg, agrees. Thornberg has said the current expansion is quite durable and despite all the political turmoil, the American economy has largely been unaffected by trade conflicts.
Trade relationships with Mexico and Canada trade look promising and America is also in a stable position with other international trade partners.
“The U.S. has 15% more buying power than China. And American companies are moving out of China as they look to protect their assets and increase their profits,” Thornberg said. “The U.S. gross domestic product (GDP) is following the same trend since 2013, picking up speed in job, income, and output growth.”
California is doing even better. If measured as a country, California’s GDP would be the fifth-largest in the world. The state’s five-year GDP growth of 3.7% is tied with Washington for the best of all states. At nearly $3 billion in 2017, Orange County’s GDP is a top performer, larger than 28 U.S. states.
On the Golden State’s job growth, Thornberg has indicated it is increasing modestly and the pace of output growth continues to rise.
A reported 282,575 California jobs were added from October 2018 to the same month this year, a 1.6% increase, matching the nation’s job growth increase percentage (with 2.4 million new jobs) for the same period. Accordingly, the state’s unemployment is down 30% at 2.7% from 6%.
With all this good news a nagging question continues to linger: Are businesses leaving California? Thornberg and all the evidence say no. California companies are staying put and thriving. That couldn’t be more true in Irvine. In fact, Irvine has an even more stellar retention rate. Since 2012, only one company—out of nearly 19,000 licensed businesses operating in the city—has chosen to relocate its entire operation out of Irvine to do business in another location. In contrast to the narrative often espoused by doomsayers, Irvine welcomed more than 600 additional businesses in the past year.
With Irvine’s strong medical technology, bio-medical, ophthalmology, technology, manufacturing, and communication sectors predominantly in the mix, Orange County overall offers some of the nation’s highest wages with a mean of $27.70 compared to nationally at $24.86. Companies worldwide recognize the county for this along with a sustainable workforce and available office space as they consider expansion to the region. Recently, Irvine has welcomed several U.K. tech companies including oneclick AG, 11Health, Forte Medical, along with Vincit California from Finland by way of Silicon Valley, and, earlier, ProTempo from New Zealand.
To that point, Irvine has been recognized as the fifth top American City of the Future, among comparably sized cities in the nation, by a leading foreign direct investment publication.
The commercial real estate market in Orange County is strong with more than 100 million square-feet and a 90% occupancy rate, as reported by this publication earlier in the year. To meet the demands of Irvine’s growing technology sector, the ultra-modern 1.1 million-square-foot Spectrum Terrace workplace opened this year attracting the likes of data giant Alteryx. Following the purchase of a 12,500-square-foot facility in Newport Beach, City of Hope has made a $1.3 billion investment for a main health campus planned to open in 2022 at the Orange County Great Park in Irvine. City of Hope joins other Irvine healthcare providers, Hoag, Kaiser Permanente, MemorialCare, and UCI Medical Center, in offering world-class patient care in Orange County.
As Thornberg sees it, healthcare and financial professional services are the two areas that will need to pay workers high enough wages to compete in the region. But the only real challenge he sees for area businesses is a shortage of workers. With unemployment at record lows (Irvine’s is 3.0%), there are plenty of available open jobs in Orange County. What businesses will need to address is their inability to fill these jobs as employment trends continue.
Already prepared to answer the need for a readily-available, highly-skilled workforce are graduates from Orange County’s nationally-ranked colleges and universities, including the University of California, Irvine and Cal State Fullerton. In Irvine alone, more than 70% of residents hold college degrees.
So, where will this workforce live? For one, in Irvine. Despite a national and county housing crisis, Thornberg points out that Irvine and Costa Mesa stand out as communities that are making strides to address the issue of available housing.
Contrary to what often makes headlines, it’s a fallacy that housing isn’t available. Irvine has been out front in the development of entry-level, high-density housing options that support the workforce of tomorrow. Thornberg sees such high-density housing as part of the solution for a major metropolitan area like Orange County. This residential model provides options for the younger demographic to find entry-level housing in the region in which they are employed.
The future looks bright. Although the majority of working adults at the county level are in the 45-65 age category and will retire in the next 10 years, Irvine’s fastest-growing population for more than a decade has been the 21-34 age group, a prime life stage for career advancement and family formation.
The Irvine Master Plan’s vision for a sustainable balance of homes, businesses, jobs, education, and the preservation of natural open space, parks, and trails, positions our city to lead the way for sustainable economic growth well into the future.
Chris Thornberg will deliver the keynote address at the Greater Irvine Chamber’s Jan. 9 Business Outlook event. Joining Thornberg for the second year at Business Outlook is Chris Schwarz, associate professor of finance and faculty director of the Center for Investment and Wealth Management at University of California, Irvine’s Paul Merage School of Business, who will open the program.Kate Klimow, chief administrative officer and director of External Relations at UCI Beall Applied Innovation, will serve as Master of Ceremonies. For more information and tickets, contact Kaitlynn Irvine at 949.502.4120
Category: Chamber News, Economic News, Member News