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The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
The State of the San Diego Economy
Randy M. Ataide, JDFermanian Business & Economic Institute
Point Loma Nazarene University
International Facilities Management AssociationSan Diego Marriott Mission Valley
January 12, 2011
Key Topics
Overall Economic Backdrop
California’s Current Economic Status
2011 San Diego Regional Outlook
Questions
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
Economic Backdrop
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2007 2008 2009 2010e 2011f
U.S. Real GDP Builds Momentum4th quarter, percent change over prior year
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
0.0
1.0
2.0
3.0
4.0
5.0
2007 2008 2009 2010e 2011f
Consumer Prices Still Subdued4th quarter, percent change over prior year
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2006 2007 2008 2009 2010 2011f
10-year Treasury Note
Fed Funds Target
Interest Rates to RiseQuarter-end, percent
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California’s Current Economic Status
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
California Recovers with NationNonfarm employment, percent
change over prior year
-8
-6
-4
-2
0
2
4
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CA
US
0
2
4
6
8
10
12
14
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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California Suffers High UnemploymentPercent of labor force, monthly
CA
US
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Job Performance across SectorsNovember 2010, percent change over prior year
-8 -6 -4 -2 0 2 4 6
Construction
Information
Trade, Trans, Utils
Government
Financial Services
Manufacturing
Leisure and Hospitality
Educ and Health Care
Prof. and Bus Serv.
Mining
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California Home Sales See Volatile RecoveryResales, thousands of single-family units
300
350
400
450
500
550
600
650
2003 2004 2005 2006 2007 2008 2009 2010e 2011f
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California Home Prices RecoverMedian price, percent change over prior year
-40
-30
-20
-10
0
10
20
2005 2006 2007 2008 2009 2010e 2011f
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
California Manufacturing Industries Posting Gains
Employment, percent change over prior year (November 2010)
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5
Petroleum Products
Food
Metal Products
Machinery
Electronics
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
California Projected Budget ShortfallsBillions of dollars, fiscal year
-6
-22.4 -21 -20 -19.4
-19
-30
-25
-20
-15
-10
-5
0
2011-12 2012-13 2013-14 2014-15 2015-16
Includes $6 billion carry over deficit from 2010-11
Source: Legislative Analyst
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
California to Add More Jobs in 2011December average, change over prior year, thousands
63
-535
-836
82
200
-1000
-800
-600
-400
-200
0
200
400
2007 2008 2009 2010e 2011f
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
PositivesConsumer ElectronicsExportsCleantechTourismTechnology Innovation, design
NegativesState and Local
GovernmentCommercial Real
EstateRegulationsWater
2011 California Outlook
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2011 San Diego Outlook
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
-80
-60
-40
-20
0
20
2007 2008 2009 2010e 2011f
San Diego to See More Jobs in 2011December, change from previous year, thousands
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
Energy Efficiency
Military Construction Sets the Standard
Natural Ventilation and Heating
New Lighting Systems
Silver Level or Higher of LEED
0 5 10
Apartment
Industrial
Office
Retail
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Commercial Real Estate ProspectsSan Diego, Scale 0 to 10
Abysmal Fair Excellent
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
StrengthsLittle New SupplyConsumer
Spending risesRetail Profits
ImproveLocation Matters
WeaknessesE-CommerceTenant “Poaching”Fringe Retail
Strips, Older Malls, Empty Box Power Centers
Retail
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
StrengthsMinimal New
SpaceJob Gains in
Professional ServicesHealth Care
Expands
WeaknessesCompanies Cut
CostsOutsourcing JobsGovernment
Demand Drops
Office
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StrengthsInventory
RebuildingForeign TradeNo New SupplyTechnology Firms
WeaknessesMaturing 5-year
leasesE-Commerce and
Point-to-Point Shipping
Industrial
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
StrengthsSharp Drop in
BuildingJob GrowthMilitary Demand“Uncoupling”
WeaknessesHome Ownership
More Attractive“Shadow” Housing
Inventory
Apartments
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
Questions
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
Recommendations to Firms
Do not Depend on Government Stimulus or Strong
U.S. Recovery
Renegotiation Opportunities
Use Social Media in Marketing
Lock in Long-term Interest Rates
Hedge Against Inflation, Exchange Rates, and Credit
Risks
Keep Tenants Happy
The Fermanian Business & Economic Institute – business & economics in action © FBEI 2010
The Fermanian Business & Economic Instituteat
Point Loma Nazarene University
Educational, Business & Economic Resourcesfor the San Diego Region
www.pointloma.edu/fbeiResearch & White PapersBusiness Plan WritingStrategic Retreats
Economic Consulting Public SpeakingInternships
MBA Program at Mission Valley Campus