Southern California ViewPoint - Thinking Macro and Micro About the Office Cycle in Los Angeles - May 2016
Several macroeconomic risks could potentially threaten the sustainability of the current office market expansion in Los Angeles. Some factors could directly impact the market, while others could indirectly cause headwinds.
The Los Angeles office cycle has always been driven by demand for space so office employment is the obvious starting point. Office employment is set to return to previous highs by the end of 2016, with CBRE Econometric Advisors forecast indicating steady increases through 2018.
The Los Angeles economy is much different now than it was during the previous peak. Sectors that are much less cyclical, such as education & healthcare and leisure & hospitality, currently represent much larger shares of total employment compared with previous decades.
Now is not the time to worry about an impending recession, but rather to start planning and preparing for when the next downturn will inevitably occur.