In San Fernando Valley, A Sleepy Suburb Awakens
In many communities, gas stations and strip malls are the telltale signs of suburbia. Characterized by low density and more space, the American suburb has historically offered residents refuge from the hustle and bustle of the city, while still providing quick access to the urban core.
For years, Los Angeles’ San Fernando Valley fit this profile. Home to communities like Burbank and Agoura Hills, the Valley has long been perceived as more suburban than the rest of LA.
But as demand for commercial space in LA increases, and traditional office hubs become less affordable, the San Fernando Valley is beginning to shed its suburban roots to become a fast-paced, dynamic destination beyond just a bedroom community.
A Booming Local Economy
Since 2014, San Fernando Valley has grown more quickly than its neighboring counterparts. Real GDP growth from 2015 to 2017 outpaced that of nearby Orange County, according to a report from California Lutheran University's Center for Economic Research and Forecasting. San Fernando Valley grew by an average of 4.1% over the past three years, while the LA metro area and Orange County grew at an average rate of 3.6% during the same period. Just one county over, Ventura County has experienced a negative average growth rate over the last four years.
A Multi-industry Market
San Fernando Valley’s economic development has come from a number of sources. Industries that pay employees well and offer greater opportunities for growth have played a larger role in driving the Valley’s economy forward. The information technology and financial sectors, for example, led in gross domestic product, while education, health and professional services saw the most job growth.
“We believe that job growth in the San Fernando Valley has been marked by a relative abundance of ‘good jobs,’ specifically ones which are more likely to allow employees to afford the high cost of housing in the region,” CLU Center for Economic Research and Forecasting Executive Director Matthew Fienup said. “A good job provides workers with both economic opportunity and upward economic mobility. The San Fernando Valley appears to be fostering the growth of so-called good jobs at a faster pace than its neighbors.”
Several new developments touching various asset classes and sectors are popping up across the Valley. At the former Los Angeles Times printing plant in Chatsworth, a new project called 24 will merge residential, retail and creative office. The corporate campus will serve as the HQ for MGA Entertainment, the company behind the popular Bratz doll product. Meanwhile in Burbank, Crown Realty and Development plans to transform a mall at Burbank Town Center. The developer will build 765 multifamily units and renovate the mall to include an open-air plaza and 40K SF of new retail space. These new projects could help activate the type of work-live-play environment modern tenants have come to expect in their communities.
"Construction is booming on every front," Parker Brown co-founder John Parker said. "We are seeing an unprecedented demand for tenant improvements in office space because businesses continue to expand. Since employee retention is so important, businesses are building higher-end and higher-finish projects. They want office space that sparks creativity. There is a fair amount of office space for professionals that was formerly retail space. That sector is repositioning itself to deal with online shopping and opening some space."
There are also a number of growing industries that are driving new construction in San Fernando Valley. For example, the rapid growth of California's cannabis industry is driving demand for warehouses and industrial facilities.
"The cannabis industry is buying industrial properties and absorbing vacancies all over," Parker said. "This is creating a greater need for new industrial space. We have a lot of ground-up industrial projects going strong."
A Heightened Focus On Transportation
Fienup and the rest of the CLU team expect San Fernando Valley’s growth to continue for at least the next two years. But the area has previously suffered from poor public transportation and infrastructure. To attract workers to the area and allow for shorter and easier commutes, city officials and planners have introduced several transportation initiatives in the Valley.
At the end of 2016, LA residents voted in favor of Measure M, which would enact a permanent sales tax increase to help fund the city’s public transit system. The passage of this measure means additional investment in public transportation projects serving the Valley. Among these new transit options will be a connection between the Valley and the West Side and an improvement to the Orange Line bus running between Chatsworth and North Hollywood.
As these initiatives come to fruition, San Fernando Valley is shaping up to become a hot spot for commercial activity throughout the region.
This feature was produced in collaboration between Bisnow Branded Content and Parker Brown. Bisnow news staff was not involved in the production of this content.