Economy
Annual San Bernardino County Economic Outlook Sees Heated Growth In Near-Term Future; Labor Market Remains A Key Stumbling Block
Downtown Revitalization: ‘A Major League Region With a Minor League Downtown’
By Kristin Lansdown, Editor at IEBJ
The diminished economic effects of the pandemic are becoming increasingly evident across California and the nation as businesses fully reopen and consumers return to activities that have been on hold for over a year. Still, the vigorous growth happening in many parts of the economy stands in sharp contrast to the experience of some workers and industries that still have a sustained climb out of the pandemic-driven crater they fell into.
A new report shines a bright light on the robust but somewhat uneven trajectory the recovery has taken in San Bernardino County.
Released at the 5th annual San Bernardino County Economic Forecast Conference, the report, finds that the County’s housing market is booming and much of its taxable sales and business activity surging – all against a backdrop of shrinking COVID-19 cases and rising vaccination rates.
Similar to other regions, housing emerged as the brightest spot in the County’s economy last year and is flourishing in 2021. From the first quarter of 2020 to first quarter of 2021, the median single-family home price in San Bernardino County soared 18%, stronger than in Los Angeles (17.8%), Orange (12.2%), and San Diego (15.4%) Counties, although behind Riverside County (21.4%).
“The driving pressure here is clear cut – demand for housing has increased markedly but supply has not,” said Taner Osman, Research Manager at the UC Riverside School of Business Center for Economic Forecasting and one of the report’s authors. “It’s an intensely competitive period where offers have soared far above asking prices and buyers are waiving inspections and other contingencies to get a leg up.” However, if fears of inflation are realized, mortgage rates are also likely to jump, which could sap some of the momentum from the market, said Osman.
Broadly, despite the recent price increases, the Inland Empire remains one of the last relatively affordable housing markets in Southern California, which bodes well for long term growth, according to the report.
Looking across the Inland Empire, commercial real estate has displayed more of the unevenness that has characterized the pandemic recession. While demand for office and retail space has fallen over the past year, as e-commerce spending has surged, warehouse properties have become hotter commodities. The vacancy rate among warehouse properties in the Inland Empire fell to 9.7% in the first quarter of 2021 even as 10 million square feet of new space was added to the region’s available stock. At the same time, asking rents increased, albeit modestly.
The weaker performance in the economy, both in San Bernardino County and across the state, comes from the labor market. The County has only recovered about 60% of the jobs lost due to the pandemic’s health-mandated closures and restrictions, according to the report. The largest losses continue to be in the battered Leisure and Hospitality sector, which was turned on its head both locally and across the globe. However, with businesses returning to normal operations, this and other damaged sectors such as Retail Trade, Government, and Manufacturing, should experience significant job gains as companies ramp up production to meet surging consumer demand in the coming months.
In addition to the local outlook, the forecast conference also included a deep dive into the future of downtown San Bernardino and how insight-driven economic development can propel the creation of a revitalized, modern, and successful downtown. Presenter Patrick Adler, who is Manager of Sustainable Growth and Development at the Center for Forecasting, highlighted the fact that San Bernardino, despite having a population twice the size of a city such as Milwaukee, lacks the kind of dynamic, vibrant, and centralized urban core that comparative areas have established.
Calling San Bernardino, a ‘major league region with a minor league downtown’, he argued that the city needs to jumpstart a downtown renaissance by recruiting anchor firms and housing developments to the downtown core. “Once San Bernardino achieves minimal density in the core, the city will be able to market itself as a destination for visitors and residents alike,” said Adler.
Presented by the Inland Empire Regional Chamber of Commerce, the 5th annual San Bernardino County Economic Forecast Conference: Back To Business, was held on June 24th at The Enterprise Building in San Bernardino. The event convened government and business leaders from across the region and beyond.