California Apparel News

The latest residents moving into downtown Los Angeles’ lofts are affluent and educated. Nearly one out of five downtown households makes between $100,000 and $125,000 a year.

But retailers haven’t capitalized on this fresh crop of Central City citizens exploring new territory.

“We have to convince retailers that this is a good market,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. “You have a lot of interesting things going on in downtown.”

Those interesting things include a new 1,200-room hotel to be built near the Los Angeles Convention Center. The hotel will help spark development of L.A. Live, an entertainment complex with a 7,000-seat theater, stores and eateries surrounding the Staples Center, home to the Lakers and Clippers basketball teams.

These projects in the southern end of downtown Los Angeles complement projects in the northern end of downtown, including the newly constructed Walt Disney Concert Hall, which houses the Los Angeles Philharmonic, and the Cathedral of Our Lady of the Angels, which attracts about 1 million visitors a year.

On the horizon is the Grand Avenue project, which envisions transforming Grand Avenue into a pedestrian walkway with entertainment venues, restaurants, stores and a 16-acre park.

Kyser gave his economic view of the region and the downtown area at a Feb. 17 luncheon organized by the Central City Association of Los Angeles, the downtown Business Improvement District that for years has been pushing for many of these new projects to take shape.

Kyser’s economic forecast for Southern California was bright. He predicted that 66,000 new jobs will be added to Los Angeles County’s payrolls this year, a 1.6 percent increase over 2004. These statistics do not include the informal economy or “independent contractors,” such as offthe- books employees who do not show up on traditional employee lists, he said.

Kyser predicted the hospitality and leisure industry will gain 22,500 jobs, professional and business services will garner 12,500 new positions, information technology will grow by 12,000 jobs, and the retail trade will add 6,500 employees. He said declines will be seen in government employment, with 6,000 fewer jobs, and manufacturing, with a loss of 2,900 jobs.

“Downtown has an unusual problem in that it is the headquarters for so many government entities,” Kyser said. “There are huge swings in employment because of the government’s budget problems.”

But the downtown hotel industry is doing better, as are the rest of the county’s hotels, which saw occupancy rates rise 7.5 percent in 2004 from a year earlier. Much of that is caused by the weak dollar, which helps draw more foreign tourists to the region and boosts the local economy, Kyser said.

More visitors will be arriving this spring when the King Tut exhibit opens June 16 at the Los Angeles County Museum of Art. The exhibit will be at the museum for six months.

On the horizon

A number of issues looming this year, however, may dampen Los Angeles County’s economic growth.

One concern is how much money might be siphoned off from local governments to balance the state budget. The state Legislature and Gov. Arnold Schwarzenegger are deciding right now what programs to axe, who will get funding and where funds will come from.

The health of the state’s business climate weighs on the Los Angeles economy. Kyser pointed out that it is still tough to do business in California, where the minimum wage and workers’ compensation insurance rates are higher than in other states.

Then there is the omnipresent traffic congestion problem, which can only be alleviated if roads are widened or built. That has been increasingly difficult to do with the state taking funds away from local transportation projects funded under Proposition 42. That piece of legislation, approved by voters in 2002, uses gas and diesel fuel sales taxes for street and highway improvements.

And finally, the federal government is deciding whether to close the Los Angeles Air Force Base, located in El Segundo, Calif., near Los Angeles International Airport.

The base generates 112,000 jobs and tons of money for the state.

“What is scary is that it generates $350 million a year in state tax revenues,” Kyser said. “If Gov. Schwarzenegger thinks he has a deficit now, just wait.”

—Deborah Belgum