Taner Osman

Most Downtowns Are Still the Biggest Job Centers

ilseu — Fri, 22 Oct 2021 04:47:28 +0000

Most Downtowns Are Still the Biggest Job Centers ilseu Thu, 10/21/2021 - 21:47 More News Victoria Pike Bond October 21, 2021

The demise of dense downtown areas in the United States has been predicted throughout, and long before, the COVID-19 pandemic. But according to a new analysis released today by the UCR School of Business Center for Economic Forecasting and Development, downtowns are far from dying and today continue to be the largest job centers in most regions across the nation.

While the report identifies new and unique challenges facing downtowns due to pandemic-driven shifts in behavior and preferences, these changes are not likely to outweigh the things that have traditionally drawn businesses and workers to centralized urban areas.

“A century ago Henry Ford predicted that cities were ‘doomed’ due to the mass production of cars, and those same predictions have come with every communication innovation since, from telephone to fax to email to Zoom,” said Taner Osman, Research Manager at the Center for Forecasting and the report’s author. “The prized benefits that central cities generally deliver – better access to workers, business services, infrastructure, and networking and innovation opportunities – have made downtowns much more resilient than people believed over the decades and firms still want a presence in these areas despite higher costs.”

The economies of downtowns, or ‘central business districts’ have been uniquely and doubly affected by the pandemic, according to the new report. These areas are home to both a hefty share of jobs in industries that suffered large employment losses and also to industries where work-from-home trends are strongest.

Prior to the pandemic, the Leisure and Hospitality sector, which includes jobs in restaurants, nightclubs, bars, museums, and entertainment venues, accounted for 17% of all central business district jobs in the largest 100 regions in the United States. That sector lost 46% of its jobs during the pandemic and has not yet fully recovered, adversely affecting downtown economies. But according to the analysis, spending on recreation is rebounding with a vengeance and given the rise in vaccinations and better COVID-19 treatments, there is no reason to expect these businesses not to resume normal operations – both downtown and elsewhere.

The more significant, and still unknown, effect stems from work-from-home trends. Throughout the pandemic, office workers have been by far the most likely to work from home. At the same time, in the 100 largest regions in the United States, office jobs account for 40% of all positions in central business districts. As more office employees work from home, the pandemic has had the effect of significantly lowering the daytime populations of downtowns, affecting multiple industries beyond the office.

The principal question is whether working from home will become a new normal.

“In many respects, the future of downtowns depends on the future of the office,” said Osman. “And the endurance of work-from-home trends will ultimately depend on worker productivity.”

He notes that academic research has come down on both sides of the productivity question, with some studies revealing greater productivity at home contrasted against a large body of research that finds face-to-face contact is a key source of worker productivity.

According to Osman, demand for office space is not likely to evaporate and the shifts could even bring new opportunity.

“A softening in downtown rents could provide an opportunity for small businesses and start-up companies to locate in highly central locations that formerly were out of their reach,” he said.

The complete analysis, "COVID’s Impact on Downtown Economies: What Does The Future Hold?" is available.

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UCR News

UCR School of Business Center for Economic Forecasting and Development

Taner Osman

Business Activity to Hit Pre-Pandemic Levels

ilseu — Wed, 23 Jun 2021 21:26:18 +0000

Business Activity to Hit Pre-Pandemic Levels ilseu Wed, 06/23/2021 - 14:26 More News Victoria Pike Bond June 23, 2021

Business activity in the Inland Empire is in clear-cut recovery mode and will reach pre-pandemic levels by the end of this year, according to the new Inland Empire Business Activity Index released today by the UCR School of Business Center for Economic Forecasting and Development. The analysis estimates that business activity in the region will rise between 6% and 10% through the end of 2021. This projection highlights the resilience of the region’s economy as it emerges from one of the most significant downturns in recent history.

“The Inland Empire, and California overall, are primed for growth,” said Taner Osman, research manager at the Center for Forecasting. “The economic fallout the region suffered throughout the pandemic recession, while considerable, has been erased from many parts of the economy; lagging areas, such as the labor market, are not recovering as quickly as we would like but should be boosted by the accelerated rate of vaccinations.”

The analysis points out that in just the first quarter of 2021, business activity increased at an annualized rate of 7% in the Inland Empire. This compares favorably to the 6.4% growth rate in U.S. GDP during the same period, underscoring the Inland Empire’s relative strength. While part of this faster pace is due to the deeper contraction the region experienced during mandated closures, the rebound demonstrates the ability of local industries to adapt and recover as restrictions were lifted.

Sectors such as logistics, distribution, and warehousing have been central to this recovery. The Inland Empire serves as a hub for goods movement across Southern California, and the surge in e-commerce demand has fueled growth in these industries. Consumer spending, which rebounded strongly as households benefited from stimulus payments and improving public health conditions, has also supported business activity. The report suggests that these factors will continue to provide momentum as the year progresses.

Despite these encouraging signs, the region’s labor market remains the weakest part of the recovery. The Inland Empire lost tens of thousands of jobs in early 2020, and while recovery has been steady, it has not been uniform across sectors. To date, the Inland Empire has recovered 67% of the jobs it lost during the historic declines of early 2020. This compares very favorably to neighboring regions, including Los Angeles, where only 36% of lost jobs have returned, and Orange County, which has regained 47%. Except for January, the Inland Empire has experienced consistent employment growth each month of 2021, suggesting that a full rebound is possible within the near term.

More importantly, the Inland Empire’s workforce has now returned to pre-pandemic levels, signaling renewed confidence among both employers and employees. “With the state and region hitting vaccination targets, confidence is rising, and employment growth should pick up quickly,” said Osman. “With California fully reopened, the Inland Empire is expected to continue adding jobs on a faster track.”

Looking ahead, the Inland Empire is expected to remain a key driver of economic growth in Southern California. Its affordable housing, central location, and strong industrial base position it to attract both businesses and residents seeking opportunities in a post-pandemic economy. The Inland Empire Business Activity Index will continue to monitor these trends, offering insight into how the region adapts to ongoing changes in the national and global economy.

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UCR School of Business Center for Economic Forecasting and Development

Coronavirus

Taner Osman

UCR News

Area Business Activity Poised for Strong Growth

ilseu — Fri, 14 May 2021 22:30:20 +0000

Area Business Activity Poised for Strong Growth ilseu Fri, 05/14/2021 - 15:30 More News Victoria Pike Bond May 17, 2021

Business activity in the Inland Empire has continued to steadily recover from the historic COVID-19 pandemic and the outlook for the near-term future is one of solid growth. Following unprecedented declines in the first half of 2020, the region’s business activity rebounded in the second half of the year, and the economic fundamentals for ongoing growth are strong, according to the new Inland Empire Business Activity Index released on May 14 by the UCR School of Business Center for Economic Forecasting and Development.

In the 4th quarter of 2020, the latest numbers available, business activity increased 5.1% in the Inland Empire, slightly more than the growth rate in U.S. GDP (4.3%). The 4th quarter’s expansion followed a 3rd quarter in which the region’s business activity soared 16% - driven primarily by a jump in consumer spending. The new analysis is forecasting that local business activity will rise between 6% and 10% throughout the remainder of 2021.

“Successfully controlling the spread of COVID-19 and maintaining momentum in the labor market has been critical to the most recent growth we’ve seen in the Inland Empire’s economy,” said Taner Osman, research manager at the Center for Forecasting. “And looking ahead, the drivers of long-run growth remain strong, with many households in the area experiencing minimal income losses and even increasing their savings over the last year.”

Overall, compared to 2019, business activity in the Inland Empire was 7.3 percentage points lower in 2020, according to the analysis. However, as businesses begin to fully reopen (if health criteria continue to be met, the state is scheduled to reopen on June 15) the local economic recovery should pick up speed and gain greater momentum further into the year.

The current edition of the Inland Empire Business Activity Index also focuses on the local creative economy, which includes industries ranging from entertainment to fashion to performing arts. The creative sectors took a tremendous hit from the pandemic as productions shuttered, and the ability to gather in groups was quelled. While the Inland Empire accounts for a relatively small share of California’s creative workforce, prior to the pandemic, that share was growing. Between 2014 and 2019, payroll employment in the region’s creative sectors increased 22%.

“We expect growth to resume in these sectors,” said Osman. “One of the great lessons of the pandemic, when we were prevented from doing cherished things like enjoying live music or going to the movies, is just how necessary the creative work of others is to our quality of life.”

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UCR School of Business Center for Economic Forecasting and Development

Taner Osman

UCR News

Sustained Economic Growth Finally in Sight

ilseu — Mon, 11 Jan 2021 16:50:50 +0000

Sustained Economic Growth Finally in Sight ilseu Mon, 01/11/2021 - 08:50 More News Victoria Pike Bond December 17, 2020

The Inland Empire’s economic outlook has been given a significant boost with the news that multiple, effective vaccines for the COVID-19 virus have been developed and are being actively administered around the globe, according to an analysis released today by the UC Riverside School of Business Center for Economic Forecasting and Development. The first vaccines in the United States were given two days ago, on December 15, launching what will be a mass nationwide immunization campaign.

“While we’ve always known that the economic recovery hinged on controlling the virus, genuine containment has been a wildcard until now,” said Taner Osman, research manager at the Center for Economic Forecasting and one of the report’s authors. “Because we now have effective vaccines in hand, the path to economic recovery is more certain and governments and businesses can get a sense of the timeline for returning to normalcy.”

Although the stay-at-home mandates and restrictions enacted in California just this month will impact December’s numbers, significant job gains, including within the Inland Empire’s hardest hit industries, should begin in earnest in the coming months, according to the analysis. Moreover, the region will be building on a labor market recovery that has been slow but steady since April’s abysmal lows.

Key Findings:

IE Employment Recovery: Despite one of the largest annual jobs declines on record in the Inland Empire (110,600 jobs lost from October 2019 to October 2020), the region has managed to outpace California in employment growth, adding back 93,100 positions since April. The nation’s rate of job growth, however, has outpaced the Inland Empire.
Unemployment Shrinking: The Inland Empire’s unemployment rate has also improved. At 9.2%, it is still far off from the 4% rate of one year ago but is now tracking slightly below the state’s rate of 9.3%. In addition, the region’s labor force has largely recovered with 28,300 workers added from October 2019 to October 2020, a 1.4% increase. This stands in contrast to continued declines in the California (-1.1%) and U.S. (-2.1%) labor forces.
Industry Pain: Far and away the hardest hit industry in the Inland Empire has been the Leisure and Hospitality sector, which has 27,600 fewer workers than it did one year ago, a 27.6% decline. But given the positive vaccine news, even this disrupted sector should begin to experience strong job gains in the next few months.
A Few Industry Bright Spots: The surge in e-commerce has helped keep the Inland Empire’s Transportation and Warehousing sector resilient over the last several months: Payrolls have expanded by 100 employees over the last year, compared with a 3.3% decline in the state overall.
Oil Prices and COVID Dampen Fuel Receipts: From the second quarter of 2019 to the second quarter of 2020, taxable sales receipts in the Inland Empire fell 8.4%. At 42.4%, the decline was most pronounced at fuel and service stations, due to both less car travel during the pandemic and a drop in global oil prices.
"Non-Effect" on Housing Markets: California’s in-demand housing markets have been left relatively unscathed by the pandemic, and the Inland Empire is no exception. The median home price in the region has continued to rise steadily, jumping 12% from the third quarter of 2019 to the third quarter of 2020. Asking rents also grew 3.7%.
Retail Under Pressure: Demand for retail space in the Inland Empire has fallen over the last year as a result of mandated restrictions and consumer reticence during the pandemic. Retail vacancies in the region grew to 9.9% in the third quarter of 2020 and asking rents fell 1.0%. Warehouse, office, and flex/R&D properties have not experienced the same drop in demand (just the opposite in some cases), and rents for all three have increased modestly.

The new Inland Empire Regional Intelligence Report was authored by Osman and Senior Research Associate Brian Vanderplas. The analysis examines how the Inland Empire’s labor market, real estate markets, and other indicators have been affected by the COVID-19 pandemic and where they stand in the economic recovery.

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UCR News

UCR School of Business Center for Economic Forecasting and Development

Taner Osman

Brian Vanderplas