Roughly 500 city and business leaders, as well as community stakeholders, attended the 2019 Southwest Regional Economic Forecast Thursday, Aug. 15, at South Coast Winery Resort and Spa to listen to economic reports and projections of southwest Riverside County from expert speakers.
The event was fueled by a partnership between the host, Temecula Valley Chamber of Commerce, and University of California Riverside’s School of Business Center for Economic Forecasting.
“So, I will start off with a disclaimer, don’t believe everything you read, things are not that bad,” Robert Field, assistant county executive officer of economic and community development for Riverside County, said. “Amazing things have happened in our county over the last 10 years or so. The county’s unemployment rate was 15.5% and now it’s 3.7%, the lowest it’s ever been, lower in fact than the state of California as a whole. These are things that have never happened before. Over a million people in Riverside County are drawing a paycheck.”
Field said for the first time in the region’s history, a private-sector company has employed more people than the county.
“We are making huge investments to take advantage of that,” Field said. “One issue, of course, the concern about how much people actually make. Again we’re making strides with that. The county is making major investments in attempting to grow the amount of higher education slots that are available in this region.”
Field said there’s no doubt the economy is going to face a slowdown due to a number of factors, including low unemployment rates.
“In some respects, the economy is overheated,” he said. “That’s one thing we hear consistently from employers is ‘where can we get more people working for us?’” It’s one of those things where we’re kind of victims of our own success.”
Lisa Hudson, regional director of marketing and business development for Universal Health Services Inc., took to the stage next.
“I’m happy to be here to give you an overview of the positive impact of healthcare in southwest Riverside County,” Hudson said. “The first is employment; the second is spinoff revenue from hospitals who have public health improvement that increases worker productivity.”
Hudson showed data from the California Hospital Association that showed a scoring study of 43 acute care hospitals in the state that indicated that they directly employed 482,000 employees, about a thousand per hospital, and impact over a million jobs in the state.
She said the data indicated that the spinoff revenue was estimated at $120 million and the total state economic impact is $268 million.
“Now, if we drill down and look at, in Riverside County, we have 16 acute care hospitals, available beds we have around 3,000 and our discharges in 2017 we’re 172,000,” Hudson said. “You can see we saw about 800,000 emergency room visits and the net revenue reported by these hospitals in the state data shows a $4 billion net patient revenue, meaning what’s collected before we pay the bills.
“If we drill down to just southwest Riverside … we have five hospitals. In 2017 we discharged 3,600 patients. We had about 187,000 emergency room visits. Our net patient revenue of these hospitals was $700 million. In addition, we directly employ about 3,700 full-time equivalents. So, that’s a lot of employees.”
Cheyenne Robinson, an account executive from Buxton’s Public Sector team, talked about retail, national trends and the market today.
“So, overall the state of retail in California, the market is strong,” Robinson said. “We are starting to see lower transactions as far as the real estate goes and that is because we are in the late stages of the current economic development cycle.
“Let’s look at first what’s happening to those vacancy rates overall. South Riverside is lower when you compare to the overall region. That’s pretty typical when you look at a market that has more desirability when it comes to retail. But it also means as a high competition when it comes to real estate,” she said.
Robinson said economists expect to see slow growth, and eventually, a flat line but not the point of a recession, only what they call a flat line. She also talked about changing consumer behavior.
“I’m sure everyone in this room is aware of the increase of online shopping,” she said. “We still see consumers seeking that face-to-face interaction – that’s continuing to grow.
“These are three of the key national trends that are taking place, so, starting with an increased in mixed-use development, omni-channel retail. Consumers are spending their dollars and not just in-store but also online, as well as retailization of healthcare.
“These are three key trends shaping the economy and the market here,” Robinson said.
“Mt. San Jacinto College did an economic study about two years ago, and we generate alone $500 million a year in economic activity, not only related to the college’s operation but informing and helping global workforce,” Schultz said.
He focused his talk first on associate degrees and bachelor’s degrees.
“Every time I’m in a meeting, I hear that there is an uneducated population in this area, this data contradicts that,” Schultz said. “If you look at the associate degree and that’s where a lot of the skilled jobs today that need to be in manufacturing, health care, a lot of areas, we actually eclipse groups like the county overall and California. You also hear a lot about bachelor’s degree attainment and how critical that is. But you look at us, we’re not too far behind the state average, but a lot of times you’re benchmarking I guess areas like the Silicon Valley in Santa Clara their degree attainment level is around 28% and then San Diego is at 24%. We have an opportunity to really close that gap and make tremendous gains for the workforce and the businesses in our region and really become a vibrant economic powerhouse.”
Schultz discussed the reimagining of the Abbott building in Temecula that the school bought for $56.5 million. He said they will be revamping it with another $55 million investment.
Gene Wunderlich, vice president of government affairs for Southwest Riverside County Association of Realtors gave an update on housing, economic and demographic data in the region.
“We hit a peak in 2017, the best year in this local market in terms of single-family homes,” Wunderlich said. “The last couple of years it’s dipped a bit. It dipped last year; it’s down a little bit again this year. We’re off 10% from our peak, but we’re only off about 40 units.
“Accounting for part of that, of course, is a slowdown in sales. But the other thing to remember is that our region down here, Temecula, Murrieta and especially Lake Elsinore, are all building houses unlike a lot the rest of the state that is not building houses. We are building down here so that offloads some of the demand for existing housing. The other thing, of course, is inventory; we don’t have a lot of inventory,” he said.
Wunderlich said a slowdown is likely imminent, but it won’t have as big of an impact as it did earlier in the millennium.
“Things are slowing, and the price appreciation that we see in housing kind of leads us to the point where we were super overheated between 2001 and 2006 when our global housing market was growing at about 35% of the year,” he said. “You can’t sustain that sort of growth. In the last eight years, we’ve been growing at about 5% to 6% annual rate. You can sustain that fairly indefinitely, so, if we do get to a point where things kind of plateau or even slow down a little bit, we’re probably not looking at a real big deal, but you never know.”
However, Wunderlich cited an order by California Gov. Gavin Newsom to build 3.5 million homes over the next seven years.
“That’s pretty aggressive,” he said. “That’s 500,000 homes a year for the next seven years at a time when we’re currently building between 80,000 and 100,000 homes across the state. What he hasn’t told us is how we’re going to do that, where we’re going to do that, why we’re going to do that. How much again?”
City managers Aaron Adams of Temecula, Grant Yates of Lake Elsinore, Armando Villa of Menifee and Kimberly Summers of Murrieta gave updates on development within their cities and major projects in the works.
Jeff Pack can be reached by email at email@example.com.