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Monday, Feb 26, 2024

Economists Hedge Against Uncertainty in 2020

By MICHAEL AUSHENKER Staff Reporter A “black swan” is that unforeseen event which could abruptly plunge an economy into chaos. As illuminated last month by a pair of annual economic forecast breakfast panels, several black swans have hit the Valley region, from the global coronavirus outbreak to local wildfires. On Feb. 20, City National Bank held its Economic and Investment Forum at Four Seasons Westlake Village. This year’s panel focused on key investment strategies by City National Bank Senior Vice President Kelly Ann Russell, Senior Foreign Exchange Advisor Tomoko Iwakawa and Senior Portfolio Manager Lindsay Cook in a discussion moderated by Senior Portfolio Manager Paul Single. Preceding the panel, City National Rochdale Chief Executive Garrett D’Alessandro said he saw low recession risk through early 2021. Regarding disruptions caused by China’s coronavirus-related shutdown, “by the third and fourth quarter, we will get back to and be above where we were (pre-crisis),” he said. Closer to home, Russell addressed issues related to Ventura County’s housing crisis. She noted low 3.4 percent unemployment in Ventura County (compared to 3.9 percent nationally) but focused on the necessity for workforce housing. “These people need somewhere to live,” she said, albeit “your home values are going to continue to go up.” When Single asked Cook what worried her, she replied, “the increasing cost of real estate,” noting a price surge for land, materials and skilled labor. Iwakawa told the crowd that now is the best time to invest in the foreign exchange before a “gradually weakening of the dollar by year’s end (toward the election).” With the Euro trading at a three-year low because of a dependency on China, “things are not looking good outside of the U.S.,” Iwakawa said. “That’s going into the dollar’s strength. … Buy foreign currency now, it’s really cheap.” At the Rotary Club of Thousand Oaks’s Feb. 21 state of the region report on the California Lutheran University campus — hosted by event chair Patrick McCoy and moderated by Eagleson Arndt Financial Advisors Principal Vicki Arndt — the conversation turned even more hyperlocal featuring the Thousand Oaks college’s Associate Dean and Professor at the School of Management Vlad Vaiman; Newmark Knight Frank industrial realtor Patrick DuRoss; Thousand Oaks Economic Development Manager Haider Alawami; and Tarantula Hill Brewery Co. property owner Shawn Moradian. After an introduction by Business Journal Publisher Charles Crumpley, Cal Lutheran’s Center of Economic Research and Forecasting Executive Director Matthew Fienup jump-started the morning by addressing the continuing malaise affecting Ventura County – five consecutive years of economic flatline, clobbered by the Great Recession and lingering SOAR-related constraints. Fienup warned of believing what he called the two greatest myths about the current economic situation — that a high stock market and low unemployment are reliable indicators of the nation’s economic health. “It’s the labor force that matters,” he said. Despite some reorganized U.S. Bureau of Economic Analysis statistics retroactively benefiting the region, “rather than being flat, we are seeing a steep decline,” Fienup said, with “a large exodus from Ventura County” due to job and housing shortages, plus “two years of fires.” “Looking forward, the labor force picture is even scarier,” Fienup continued, as Baby Boomers age out of the workforce. DuRoss gave an overview of Conejo Valley’s hot industrial real estate scene. In North Los Angeles, entertainment production — fomented by the streamer wars — and e-commerce have been the biggest drivers of industrial, DuRoss said, along with food and beverage, cosmetics, aerospace and biotech. If one were to isolate thriving San Fernando Valley from Greater Los Angeles, it would be the fifth largest real estate market in the country, he said. In Conejo Valley, Rancho Conejo Boulevard, Wendy Drive and Ventu Park Road comprises the “main industrial pocket,” DuRoss said. “Ventura County benefits most when we have businesses growing from the San Fernando Valley,” he continued. DuRoss, with colleagues and fellow event attendees John DeGrinis and Jeff Abraham, helped transact deals at Conejo Spectrum Business Park, a nine-building industrial complex that’s home to Atara Biotherapeutics; and Conejo Summit Business Park, both in Thousand Oaks. “The future is biotech growth in Newbury Park,” said Alawami, who commended Thousand Oaks’ City Council for encouraging development, particularly in biotech, and rewriting code “just to make it easier (and) take the hurdles out of the way.” Employing 7,000 people, Newbury Park’s Amgen Inc. has set the tone for a massive biotech cluster in the region, which includes Atara and many others. Biotech has attracted real estate developers such as Shapell Properties, with two buildings totaling 200,000 square feet, and Rexford Industrial Realty, with a pair of properties spanning 175,000 square feet, to make substantial investment in Ventura County. On Rancho Conejo Boulevard, two “functionally challenged buildings” were converted into laboratory space, DuRoss said. Residentially, Alawami discussed the hundreds of units currently under way — with two pending projects promising 514 units — towards the city’s 2,600-unit mandated goal. “We need to do that, otherwise we will be stagnant,” Alawami said. “City Council is asking for more workforce units. The problem is the lack of land and a lack of funding sources.” Commercially, Alawami and Moradian agreed that Thousand Oaks can improve. “We have a lot of untapped opportunity,” Moradian said. “What we should do is add a lot of experiential retail. Newbury Park has very little in terms of that.” It’s not the matter of another store or restaurant, Moradian added, but finding “uses that aren’t currently here.”

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