L.A. County Business Expansions Down

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Major business expansions in L.A. County fell sharply in 2007 as the region’s economy deteriorated, according to a report issued Monday.

The report from the Los Angeles County Economic Development Corp. found that the number of major business expansions dropped 23 percent to 100 projects in 2007. A major business expansion is defined as a new lease of at least 20,000 square feet, or an expansion of at least $1 million in value.

The decline in major business expansions in L.A. County outpaced the 18 percent drop in the five-county Southern California region. The Inland Empire counties of Riverside and San Bernardino posted the worst loss at 31 percent.

Besides the housing downturn and credit crunch that dealt major blows to the construction and financial services sectors, a shortage of industrial space also contributed to the drop in major business expansions.

“The region’s ultra-tight industrial real estate markets have had an impact on expansion trends,” said Jack Kyser, chief economist with the LAEDC and the lead author of the report.

L.A. County’s industrial vacancy rate was only 1.5 percent in 2007, the tightest of any major market in the nation.

Professional services, which includes accounting, law, architecture/engineering and personnel services, posted 50 expansions — the largest number of business expansions for any industry in Southern California. The finance and insurance sector recorded 20 major expansions; logistics and warehousing was next with 13.

There were only nine major expansions of foreign firms in Southern California last year, down from 21 in 2006.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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