It’s been a super year for Orange County’s economy.
“All you have to do is look around and see the activity going on,” Lewis Cornell, Jacobs Engineering Group Inc.’s top representative for the western U.S., told the Business Journal in September. “There’s just a ton of activity out there. This is the best I’ve seen it in nearly 30 years.”
Now the question is whether the growth will continue to explode next year.
It’s hard to go from great to greater. Plenty of signs are pointing to a good, not great, 2019 with a slowing economy, albeit not as bad as a full-blown recession often highlighted on scary headlines by some media.
Chapman University said that predicted recession won’t happen next year—it thinks the U.S. economy will grow 2.4%.
The biggest OC economic blockbuster of 2019 will most likely be the opening of Star Wars: Galaxy’s Edge, a 14-acre playground that will be Disneyland’s biggest expansion and by some estimates involve $1 billion worth of expenditures.
An opening date hasn’t been announced; insiders say it should open in time for the summer crowds.
As a result, business looks like it will boom in Orange County’s most populated city.
The Anaheim Convention Center is predicting its “big show” events—mega-events that book at least 1,000 rooms—will see a 31% rise in attendance to 912,000.
Anaheim is already the OC city with the most sky cranes. It has $4 billion worth of leisure and hospitality investments. Top tier investors like billionaire Henry Samueli are prowling those huge parking lots surrounding the Honda Center and Angel Stadium in search of development opportunities.
Another area where we’ll see plenty of construction work will be the $1.9 billion expansion of the San Diego (405) Freeway from Costa Mesa to the San Gabriel River (605) Freeway.
Newport Beach-based Alliant Insurance Services Inc., which has an estimated $1.45 billion in revenue this year, has a unique insight into the U.S. economy because it can track when its customers are pulling back expenditures by cutting employees and payrolls.
“We’re not seeing any of that,” Chief Executive Tom Corbett said in an interview this month. “Things look fine to me. We’re not seeing anything like a pullback.”
Still Opportunities
While amusement park and freeway expansions are good, some signs aren’t as positive.
Chapman University is predicting OC’s job growth will slow from 2.2% this year to 1.7% next year. That growth still means 35,000 net new jobs this year and another 28,000 in 2019 to a projected 1.68 million jobs.
“Things are slowing down, but on the plus side, you still see Orange County outperforming California and the U.S., so that means there are still opportunities out there,” said James Doti, president emeritus at the school in Orange and one of the country’s most eminent economists.
What may keep growth down is an exodus of employees in their prime—people between 25 and 54—who cannot afford to live in the county, where the average price of a single-family home rose 5.6% to $822,000 this year and may rise another 2.9% next year to $845,000, according to Chapman.
Rising interest rates are also foreshadowing OC banks lending less and consumers buying fewer homes.
New housing permits have declined since 2016. New homes, of which there are thousands in Irvine and Rancho Mission Viejo, are beginning to offer more incentives to move the inventory.
The shares of OC-based homebuilders TRI Pointe Group Inc. (NYSE: TPH), Five Point Holdings LLC (NYSE: FPH) and William Lyon Homes (NYSE: WLH) have fallen in recent months.
This week, the Business Journal highlights what to expect in the coming year in the areas of real estate, technology, healthcare, retail and apparel, finance and restaurants. If we miss a big trend, send us an email.
