Five tri-county economic trends we’ll be watching in the New Year
Henry Dubroff
Conventional wisdom holds that with a federal budget in hand, a financial system on the mend, rising housing prices and steady job growth, 2014 ought to be a pretty darn good year.
I’ll accept that for once at least part of the conventional wisdom might be right, particularly when it comes to no government shutdowns, better bank profits and a stronger housing market.
But what does it all really mean for the Tri-Counties, where the economy didn’t suffer as much as the “other California,” aka the Inland Empire and the Central Valley, during the Great Recession?
How long can San Luis Obispo, South Santa Barbara County and other wealthy enclaves count on faster-than-average growth?
I can’t say for sure what will happen during the next 365 days, but here are a few of the trends the Business Times newsroom will be watching during 2014.
• An energy boom is in the making. Yes, environmentalists hate it. But capital is pouring into the energy sector, clever oil-and-gas companies are learning to live with severe carbon emissions limits, slant drilling may open up new fields and there is just enough infrastructure to make it all cost-effective. Fights over drilling, new pipelines and, yes, siting a new power generating plant somewhere in the region will be big news in the New Year.
• West Ventura County and the Santa Maria Valley are the new growth markets. No, we will not see the return of pie-in-the-sky condo towers at Mandalay Beach that marked the height of the pre-recession, housing-bubble folly. But new apartment projects and condos will look a lot more viable as the recession fades and as household formation outstrips supply. For single-family housing, the bellwether is Limoneira Co.’s East Area I project in Santa Paula. Another big investment by a major national homebuilder could jump-start home construction region-wide.
• Deals could reshape health care. From the proposed IPO for Santa Barbara-based Inogen, to a recent investment in an Amgen spinout to the Sansum-Cottage Health System merger, there is a lot of dealmaking in the air around health care, with the Affordable Care Act as a significant backdrop. Our forecast calls for a consolidation of hospital ownership and more investment in pharmaceutical and devices companies as the hunt goes on for more effective and less expensive treatments.
• Paso Robles will limp toward a solution to its water crisis, but the water wars on the Central Coast will be a permanent reality. Overpumping, salt intrusion and the need to balance agriculture with urban encroachment will be a major theme — unless, of course, El Nino returns with major rainstorms.
• A rising SoCal economy will lift all boats. New Los Angeles Mayor Eric Garcetti brings a more balanced approach to business development and he is inheriting a much stronger economy. And a strong L.A. economy always means a strong tri-county economy, if only because of the spillover impact on tourism, which is still our No. 1 industry.
Among the issues that remain unresolved as 2013 draws to a close are whether machine-tool maker Haas Automation will find a way to expand in Oxnard and whether Simi Valley can finally land a big tenant for the long-vacant former Farmers Insurance headquarters building.
In Santa Barbara County, new CEO Monica Miyasato steps into the usual morass of South Coast squabbles, including the fight over widening Highway 101 through Montecito, subsidies for the Miramar, a dysfunctional Board of Supervisors, severely underfunded pensions and a state of denial about it all. Good luck with that.
San Luis Obispo County has the nice problem of trying to sort out how to keep an emerging tech corridor on track. Look for an IPO from software firm Mindbody sooner rather than later.
Note that we are not talking about a banking crisis or the state headed for a debt default or a severe contraction ahead. If 2014 is going to be the best year since the Great Recession, it might be a good idea to make the most of it — the business cycle is not something that can be repealed.
• Contact Henry Dubroff at [email protected].
