In April and May of this year, Orange County recorded back-to-back unemployment rates of 2.6 percent, its lowest since the turn of the century, according to JLL.
The firm recently reported that, during the last 12 months, Orange County added 17,300 jobs, representing 1.1 percent job growth. This was led by educational and health services which gained 9,000 jobs.
Since the Great Recession ended, Orange County’s economy has become more diversified, particularly in healthcare, technology, and professional services, which has significantly contributed to the expanded workforce. While job growth has slowed down a bit compared to recent years, JLL says this trend is common in most job markets as more people of the labor pool have found work. Jobs are being created despite the tight labor market, indicating companies are in expansion mode.
SoCal Real Estate spoke with Curtis Ellmore, SVP at JLL, about Orange County’s phenomenal unemployment rate, what is causing it, and how it impacts CRE in the region.
SoCal Real Estate: To what do you attribute Orange County’s record-low unemployment figures?
Ellmore: It has to do with a couple of things. First, you have a market or an area that is a destination location where people want to live. Second, you have a lot of great universities and talent here, and companies want to grow here so they can access all of that talent. We’re seeing a big explosion in tech and healthcare in Orange County as a result a lot of the new people coming out of school who are moving down to Orange County for those positions.
What impact is low unemployment having on each of the property sectors in Orange County?
For office, in particular, when you have low unemployment, more people are working and more people are taking down office space. As a result, rental rates are going up, and vacancy lowers. Space becomes less available and more expensive. Also, companies are seeking creative space to attract employment, so that area of the office sector benefits.
In multifamily, we’re seeing an apartment boom in OC right now because you have demand for people to find new housing, You have a massive supply of apartments that keep getting gobbled up by people coming out of college and moving in.
Industrial is similar to office: there are more jobs and more companies wanting to be here.
These food groups have really benefited from low unemployment.
What’s the outlook for employment in this market over the next five years?
Unemployment can only go so low; eventually, it hits a baseline and a saturation point. But, in terms of the overall market landscape, from a real estate and space perspective, our outlook at JLL over the next 12 to 24 months is that we will continue to see a very healthy market. We don’t see shrinking sectors.
During the downturn, the market got leveled out, and many of the mortgage companies that were here got taken out. Now, there’s a much more even base of tenants; it’s not lopsided enough to have a big fallout. There’s a healthy balance of companies, and as a result we still see some runway with this cycle we’re in right now.