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ORANGE COUNTY, CA-The Orange County economy has many upsides, according to this month's UCLA Anderson Forecast. Along with other Southern California markets, a clearer pattern is emerging in the regional economic indicators of Orange County. The key sectors of improvement are job creation, the resale housing market, the visitor industry and the office market.
Jerry Nickelsburg, adjunct professor and senior economist of UCLA Anderson Forecast, and Mark Schniepp, director of California Economic Forecast, say that more new job creation actually occurred in Orange County than the monthly reports indicated during 2012. “The recent employment revisions by the State of California show that Orange County created nearly 32,000 jobs last year, compared to the pre-revision estimate of 23,000 jobs. Evaluating the record since late 2009, the State overstated the job loss in 2010 and understated the job gains in 2011 and 2012.” In fact, the financial-services sector, which lost 37,000 jobs between early 2006 and 2010, is gradually recovering, adding 8,000 new jobs over the past three years.
In addition, the resale housing market is surging with more volume and higher selling values, according to the report. Investor purchases of single-family homes have eliminated much of the distressed and conventional inventory in the market.
Moreover, the lack of any new office construction and low lease rates for existing space have created conditions for a healthier office market in the county, the report states. “There is more leasing activity in commercial real estate, especially in the office market,” say Nickelsburg and Schniepp. “Both vacancy and availability rates are falling, and office-using job creation is accelerating.”
The report also indicates that Orange County residents are spending again, both on cars and retail goods in general. The expectation is that when more residents move into new housing, they'll begin buying furniture and furnishings this year and next.
On the development front, new projects have been slow to rebound, although new housing starts jumped 29% in 2012, with more than 6,000 housing permits issued. In both 2011 and 2012 more than half of the new housing was multifamily units.
As far as tourism goes, occupancy rates at the county's hotels and motels continue to tighten, and attendance is at record levels at Disneyland and California Adventure, according to the report. Countywide, hotel/motel occupancy rates average 73% in 2012, up from 71% in 2011. Average daily room rates jumped 6% in 2012, and visitor serving employment rose 2.4% over the past 12 months. More than 4,000 jobs were created in Orange County's leisure and hospitality sector last year, pointing to a healthier economy overall.
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As GlobeSt.com reported earlier this week, Orange County is continuing on its upward trajectory post-recession, and attorney Steve Edwards at Manatt, Phelps & Phillips LLP tells GlobeSt.com that it's a “hot, hot market.” Originally a farming and ranching community that eventually decided to sell land and start developing real estate, Orange County has emerged into a shining star among West Coast markets—one that has recovered from the economic downturn faster than most of California, boasting a 6% unemployment rate.
Check back later today for an update to this story that includes a forecast for Orange County's economy from UCLA Anderson Forecast.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
