Orange County business execs may appear laid back to the rest of the world, but they are a seriously competitive lot. Good thing. In business, building competitive advantage brings a disproportionate share of the goodies. Great talent gravitates toward your company. Customers are more likely to select your brand, which builds growth and market share. Accelerating growth can bring better efficiency and margins.
Metro areas also reap disproportional rewards when their businesses succeed. Beyond employment, wealth is created, reputations grow, real estate values go up, government can afford to provide services, and people feel vested in the area’s future success. That attitude sustains growth.
Some areas develop extraordinarily strong competitive positions. We refer to those places as “superstar” areas.
Silicon Valley is the superstar of computing technology, New York and London the superstars of finance, and Boston the superstar of education. To be a superstar, you need two things: scale and market share. The key metrics are the number of people your region employs in an industry and the share differential between you and the other regions.
Is Orange County a superstar region? And, if so, what is it the superstar of?
The short answer: getting there. Our Hoag Center research indicates that OC is becoming close to superstar status in two areas: real estate and medical equipment and supplies manufacturing.
OC’s Real Estate Juggernaut
Real estate is a broad industry with its own ecosystem. Looking at that broader ecosystem, Orange County is estimated to have employed 196,877 people last year, according the Bureau of Labor Statistics. That makes the real estate economy the largest single-industry sector; 9.4% of working people in the county are employed in it. That compares with 6.4% of the U.S. workforce, which means we have 46% greater per-capita employment in real estate than the country as a whole. Healthcare is slightly lower in employment size, but OC is on par with the rest of the country in that industry.
We have made a simplifying assumption and included all legal and credit intermediation employment in the real estate sector.
Here is a percentage breakdown of the employment numbers by subsector:
Why is OC a superstar of real estate? Because it has more employment per capita than almost anywhere in the United States. We have a unique history, going from raw land to one of the largest populations and economies in a 50-year time span. Building infrastructure and developing new forms of projects is naturally going to be a core competence. We also had something very few places have: the master planning that came from the Irvine Co. That meticulous, comprehensive planning molded the style, density and inherent way people interact with one another through their physical spaces.
As we developed, we incorporated changes in technology, such as desalination, recycled water and solar power. We also pivoted with changes in people’s lifestyles, such as adding bicycle paths, meeting the desire for shorter commute times, and enhancing recreational access.
All of that ends up at the doorstep of the real estate industry. Whether it is through innovation in private development or government regulation, the industry has developed into an exemplar for the rest of the country and similarly developing areas of the world. Just as the United States has built up “soft power” by promoting American culture throughout the world, Orange County’s style and development models accrue a kind of industrial influence that other areas do not have.
Our strategic advantage is why Chapman University is investing so heavily in building its leadership in the real estate industry by expanding its C. Larry Hoag Center of Real Estate, where I am a research fellow. Our goal is to use the region’s superstar status to study how to create and maintain innovation in this area.
Editor’s Note: Business owner and consultant Marshall Toplansky co-founded Big 4 accounting firm KPMG’s data & analytics center of excellence. In 2011, he was elected to the Computer Industry Association Technology Hall of Fame and recently co-authored “Orange County Focus: Forging Our Common Future” with urban demographer Joel Kotkin. Toplansky’s contributions will appear monthly on the Business Journal’s back page.
August: The case for Orange County’s other “superstar.”
