Here is a great hot sheet of economic indicators for Los Angeles County. Some statistics are leading while others are lagging indicators. 
Labor Market Update – Continued Gloom Along with Other Indicators
The Bureau of Labor Statistics released its latest U.S. Labor Market Report on Friday, covering the U.S. employment situation in December, and the news was depressing. Total nonfarm employment fell by -524,000 jobs in December, and the job losses in October and September were revised down to -584,000 jobs and -423,000 jobs respectively. In percentage terms, employment has declined by -1.12% in the last three months. This was the biggest three-month decline since mid 1980 and before that, the first three months of 1975 (Both years saw severe recessions).
The manufacturing and construction sectors continued to shrink, with job counts plunging by -791,000 jobs and -632,000 jobs respectively compared to December 2007. In manufacturing, about 46% of the total job losses came in just four sectors: motor vehicles & parts (-162,000 jobs and counting), furniture manufacturing (-71,000 jobs), wood products (-76,000 jobs), and textiles & apparel (-56,000 jobs).
Labor market conditions have deteriorated significantly in recent months, and the damage is spreading rapidly. About 55% of the jobs lost during 2008 were in manufacturing and construction. However, that share has been dropping recently, as jobs are disappearing in almost all sectors of private industry (except health services, private education, and mining). The nation’s unemployment rate hit bottom in March, 2007 at 4.4%, when 6.7 million workers were jobless. By last month, the number of workers without a job had grown to 11.1 million, an increase of 4.4 million unemployed. The nation’s labor markets are quite troubled, and more bad news is likely in the next few months.
Although these data are countrywide, the Southern California and Los Angeles economies are not unlike them. These leading indicators are likely an omen of decline for the local warehousing and manufacturing industries and the real estate they occupy.
East L.A. – Aspires to Incorporate
There have been three previous attempts at incorporation in East Los Angeles in 1961, 1963 and 1974. The name of the proposed city is the City of East Los Angeles. The community is 7.5 square miles (4,783 acres) in size. The community is bounded by the cities of Los Angeles, Commerce, Monterey Park, and Montebello. There were 126,054 residents in East Los Angeles, according to the 2000 Census. There are 4,783 acres in East Los Angeles, 164 acres of which are industrial zoned land (375 parcels).
The manufacturing sector makes up 11 percent of East Los Angeles jobs. Ten of the largest employers are manufacturers of products ranging from metals, brushes and adhesives to tortillas and ice cream. Food-related manufacturing is more concentrated in East Los Angeles than in the County as a whole.
Top property owners by assessed value include the Roman Catholic Archbishop of Los Angeles, California Water Service Company, AltaMed Health Services, Telacu Development, and Humboldt Creamery. Major industrial zoned streets include Noakes St, Union Pacific Ave., Calzona St., Los Palos St., Indiana St., Gage Ave., Bonnie Beach Place in the southern section. In the northern section, known as City Terrace, major streets include Medford St., Fishburn Ave., Worth St., Marianna Ave., Fowler St., Whiteside St., Valley Blvd., and Knowles Ave.
Real Mex Food Expands Food Processing Plant
Real Mex Foods supplies more than 200 restaurants as the distribution branch of Real Mex Restaurants, Cypress, Calif., including Chevy’s, El Torito and Acapulco restaurant concepts located in Arizona, California, Nevada, Oregon and Washington. In addition, Real Mex Foods has branched into broader frozen foods processing for foodservice, co-pack and retail channels serving clients such as Sysco Distributors, El Pollo Loco, Carl’s Jr.-Green Burrito, Albertson’s and U.S. Foods.
In February, Real Mex closed its 32,000-square-foot manufacturing plant in Santa Fe Springs, Calif., and moved into a 100,000-square-foot space in Vernon, California. The city of Vernon and a developer came to us and proposed a deal where we got a 100,000-square-foot building retrofitted to a state-of-the-art USDA manufacturing plant, Angulo explains. It was an opportunistic deal. They got us into 100,000 square feet at the cost that we would have gotten a build-to-suit 65,000-square-foot building.
Food safety also was a major priority for Real Mex in building out the new plant. The company built an in-house lab and hired a complete quality assurance team. Other food safety precautions include a triple boiler system, floor foamers, centralized sanitation system, in-house chlorination system for vegetables and a full quality assurance staff.
The developer invested $10 million in the build out, while Real Mex spent about $4 million on equipment. The completely refurbished plant quadrupled the company’s previous capacity and allowed it to more than double the number of kettles, tumble chillers and blast freezers. www.realmexfoods.com
Market Update – Q4 2008
Deceleration. Real estate industry investors and professionals expect financial and real estate markets in the United States to bottom in 2009 and flounder for much of 2010, with ongoing drops in property values, more foreclosures and delinquencies, and a limping economy that will continue to crimp property cash flows, according to the Emerging Trends in Real Estate 2009 Report.
Losses are projected in real estate values from their 2007 peaks. The lack of real estate financing will prevent us from finding the bottom of the market. However, the Central Los Angeles industrial real estate market is not expected to suffer as much as other industrial markets not only in Southern California but also across the country.
Despite an increase in vacancy rate, the Central Los Angeles industrial real estate submarket continues to maintain the lowest vacancy rates for the nation, despite a decline in demand. Other commercial sectors such as multi-family, office and retail will suffer a far worse fate in the coming 12-24 months. We do expect continued softening in values as demand from buyers and tenants has fallen off substantially. Many companies report revenue drops in the range of 30 to 40 percent for 2008. More properties continue to become available providing a better selection for those who need such space.
The consensus is that the problems which have plagued the second half of 2008 will persist, and possibly worsen into 2009. Consumers have significantly scaled back spending and the reverberations are filtering down all the way to the Los Angeles industrial market as retailers cut their orders for merchandise that once filled warehouse distribution centers to capacity.
The impact of lagging activity will show up in the asking rents and in the increasing levels of available sublease space, especially in industrial markets along the ports’ distribution path. What is unique about thisdownturn is the increase in available warehouse/distribution sublease space. Asking rates will dip as vacancy increases moderately. However the largest concern facing the market in the coming year is how long the national downturn will last and how widespread its effects will be.
As economic specialists scratch their heads in Washington, the rest of the nation and world is forced to wait and see. Because of the overarching economic issues, vacancy will increase a half point and absorption will remain negative in 2009, as rents see a 6-8 percent decrease.