Economic Outlook 2002 Barely Making the Grade

While there are some bright spots, the broader prospects for the L.A. economy in 2002 are decidedly unremarkable.

Advertising

Year in Review: Years of plenty gave way to famine for advertising agencies and public relations firms. A bad economy, sagging local television commercial production and the Sept. 11 terrorist attacks were some of the factors that led to a dearth of work.

Agencies laid off employees and some PR firms even shut down. Among the casualties: Stoorza Communications’ L.A. office and Carl Byoir & Associates… With fewer accounts available, the competition for work became fierce. Large firms began fighting for small accounts they never would have considered in the past. Advertisers spent less but demanded more.

Players to Watch: Initiative Media North America, a Los Angeles media-buying company The company lost the Walt Disney media buying and planning account to Starcom North America of Chicago in a review by Disney, which was one of Initiative’s largest clients Grey Global in L.A; despite an industry-wide downturn, the agency won two large state accounts in 2001 and reported a 25-percent increase in revenues.

Buzz for 2002: There will be a lot of movement in the industry as companies put their accounts into review to try to get the most for their money. Automotive accounts held by L.A. agencies, including Hyundai and Kia, have come up for review or are expected to this year.

The industry will become even more competitive. Small agencies will struggle to compete with large ones. Clients will continue seeking fee reductions and added-value deals. “Integrated advertising,” which goes beyond product placement to include creating a show around a brand, will become more common as networks and advertisers look for ways to save money.

Viewer-drawing events like the Winter Olympics and the Academy Awards will get companies thinking about advertising again and spark a turnaround in the second quarter. If a few companies start an advertising push, their competitors will follow.

Still, caution will be the word of the day. Few advertisers will feel confident enough to take chances and put out eye-catching campaigns. Some, however, will seize the opportunity to distinguish themselves from their competitors… Advertisers will look for short-term deals and wait until the last minute to put their money down.

Grade: C+

Claudia Peschiutta

Aerospace/Defense

Year in Review: Local employment fell to 108,000 from 113,700 at the beginning of 2001. Most losses were attributed to the commercial jet market Boeing already had been hurt by increased competition from Airbus and it took another big hit after the Sept. 11 attacks. It laid off 1,200 at its Long Beach-based 717 operation and instituted a 50 percent production cut, to 12 planes per year beginning in 2002 By contrast, Northrop had a great year; it was part of the Lockheed Martin team that won the $200 billion Joint Strike Fighter contract a deal that potentially could pump $30 billion to $40 billion into its Air Combat Systems operation between now and 2040. It also has acquired the Newport News shipbuilding operations.

Players to Watch: Northrop will be the most active aerospace company locally. It has a 20 percent stake in designing the aft and center fuselages, as well as navigation equipment, for 3,000 Joint Strike Fighters (F-35) Raytheon Co. of El Segundo has a slew of warfare projects in the works, including the radar system for Boeing’s Navy F/A-18 jet fighter and Northrop’s Air Force Global Hawk unmanned reconnaissance plane.

Buzz for 2002: Northrop will add as many as 1,200 jobs to its El Segundo plant and another 200 in its Palmdale plant as the 10-year, $19 billion engineering and testing phase begins for the F-35 Local subcontractors, which ultimately will rake in $100 billion on the project, are expected to hire 900 additional workers in 2002 About 250 subcontractors will get a share of Lockheed’s Air Force F-22 Raptor jet fighter.

Boeing will lay off another 300 workers by April and will see job growth only in its El Segundo-based satellite making operation, where 1,000 new computer programmers, engineers and technicians will be hired in each of the next four years. New hires will work on design and development of top-secret reconnaissance satellites under a $20 billion, 25-year contract.

No one expects a return to the 1988 local defense heyday when 274,000 people were employed, but look for job levels to return to 110,000 by the end of the year.

Grade: B+

David Greenberg

Banking

Year in Review: Consolidation continued In January, Comerica Bank completed its $1.3 billion acquisition of Imperial Bank Largest acquisition of the year: Sanwa Bank California merging with Tokai Bank of California to form United California Bank, L.A.’s largest bank. Months after the merger and part-way into a $10 million marketing campaign, BNP Paribas of Paris agreed to buy United California Bank. BNP plans to merge UCB with another acquisition, Bank of the West, thus ending the short-lived UCB brand In November, City National announced plans to buy Oakland-based Civic Bancorp, doubling its Northern California asset base.

Players to Watch: City National, which will become the largest bank based in Los Angeles (assuming BNP Paribas closes the UCB transaction). Smaller banks looking to sell may find a suitor in City National, which has been increasingly profitable Citizens Business Bank, with a strong foothold in the Inland Empire, is quickly gaining recognition Nara’s aggressive chief executive, Benjamin Hong, who guided the institution through asset growth of 25 percent last year, much of it through acquisitions.

Buzz for 2002: More consolidation The number of local institutions large enough to be considered targets for out of state institutions are in short supply so consolidation could take place among regional entities The speed and frequency of acquisitions will, like all things, be dictated by the economy’s strength

For the last few years, the strong economy has contributed to high acquisition prices High prices in mind, the local institutions looking to sell will hold out for a few months Activity will increase when the bargains begin to surface, most likely in the second half of 2002 Growth among ethnic institutions will continue Unlike other banks, it will be organic very few acquisitions. Those banks that are acquired will be bought on the cheap The major ethnic players, EastWest Bank, Cathay Bank and Hanmi Bank, will stay intact, growing at a slower pace, maybe making an acquisition or two These companies have shown good returns, and the owners have no reason to sell In addition, non-ethnic banks looking to buy are, for the most part, intimidated by the ethnic clientele.

Grade: B+

Conor Dougherty

Government

Year in Review: A watershed and turbulent year State officials contended with an energy crisis, highlighted by rolling blackouts, as deregulation failed. To counter this, government entered the energy market in a big way In L.A., two-year mayoral campaign ended with election of James Hahn, scion of L.A. political legacy Half of the City Council turned over as term limits took full effect Economic and security impacts of Sept. 11 terrorist attacks caught all levels of government unprepared and response has been slow since then.

Players to Watch: Former L.A. Mayor Richard Riordan, the likely winner of the Republican gubernatorial nomination, to take on incumbent Gray Davis L.A. Mayor James Hahn, who must grapple with secession, tight budgets, the mess created by tight security at L.A. International Airport L.A. Police Chief Bernard Parks, whose contract is up for renewal on June 30 L.A. County Supervisor Zev Yaroslavsky, chair of the board for 2002, as the county grapples with an imploding health care system, just as demand rises.

Buzz for 2002: Governor’s race will take center stage Riordan likely to defeat rivals Bill Jones and Bill Simon to win Republican nomination on March 5 General election expected to be nasty and expensive. Election to be referendum on Davis, whose handling of the energy crisis was criticized…On downticket races, tight battle for Insurance Commissioner. Legacy of Executive Life Insurance sale will continue to haunt John Garamendi, who seeks return to post Final piece of reshaped L.A. City Council rests on outcome of March 5 runoff between DreamWorks SKG executive Wendy Greuel and state Assemblyman Tony Cardenas Also on ballot: controversial measure (Proposition 45) to extend term limits; $600 million bond for L.A. police facilities.

In L.A., biggest, most divisive battle expected over whether to renew contract of L.A. Police Chief Bernard Parks police union wants him out, while African-American community fighting hard to keep him. Hahn caught in middle Expect lots of sound and fury over secession in the San Fernando Valley, but vote will likely be put off until 2003 or 2004 With economy suffering and the city now having better ability to track scofflaws, this might be the year that sweeping business tax reform gets enacted.

Tight budgets and the continuing fallout from terrorist attacks is likely to overshadow all this Government’s standing may be boosted in public opinion polls, but at all levels, response to the economic impacts is likely to be too little, too late State will confront $12 billion to $14 billion deficit, leaving Davis and legislative leaders with tough choices between spending cuts and tax increases A $156 million budget shortfall at city level means belt-tightening and few new initiatives County budget could lose hundreds of millions of dollars, possibly throwing already stressed health budget into crisis.

Grade: C

Howard Fine

Energy

Year in Review: Tumultuous year in both the electricity and natural gas markets California’s partially deregulated electricity market melted down as two of the state’s three utilities became insolvent and rolling blackouts swept through much of the state in January, March and May (except for the area covered by power-rich L.A. Department of Water & Power) In October, state officials signed a deal to prevent Southern California Edison from filing for bankruptcy Record electricity price hikes of up to 80 percent passed in May, after which wholesale prices promptly tumbled.

Natural gas prices surged early in the year, forcing local textile makers to close their doors; prices have eased since then After peaking early in the year, gasoline prices came down, with the slide accelerating after Sept. 11 to hit their lowest levels in two years.

Players to Watch: S. David Freeman, former head of L.A. Department of Water & Power and energy aide to Gov. Gray Davis, who now runs state public power authority John Bryson, chairman of Edison International Loretta Lynch, independent but embattled head of the state Public Utilities Commission David Wiggs, new general manager of L.A. DWP.

Buzz for 2002: Power crisis of 2001 has transformed into fiscal crisis for state as $6 billion power tab will come due unless bonds are sold in coming weeks. Squabbling over how bonds will be repaid is holding up process. Until bridge financing is obtained, Edison will be unable to return to the business of buying power.

Independent System Operator projects possible electricity shortages next July as hot weather brings the return of rolling blackouts. But major companies and building owners have converted to more energy efficient technologies. That, combined with recession, should further drive down demand.

Davis had committed to building dozens of new power plants, but current power surplus likely to slow drive Natural gas market should be more stable in the short run as supplies are plentiful, but as more natural gas-powered generators come on line, volatility could return.

As worldwide demand has plunged during the recession, oil prices are expected to remain at low levels compared to last three years. This could put a crimp on returns for exploration companies like Unocal Gasoline prices at pump could fall even further early in the year before the usual spring price spikes set in.

Grade: C-

Howard Fine

Film

Year in Review: Despite a record box office that surpassed $8 billion in domestic ticket sales, 2001 was no picnic No less than 10 major film exhibition companies were mired in bankruptcy proceedings in 2001 The sluggish economy took its toll and studios got out of sync from a production speedup (and subsequent slowdown) resulting from strike threats by actors and writers that never materialized After Sept. 11, Bush Administration looked to Hollywood to cook up bizarre disaster scenarios; otherwise terror attacks were but a blip on the radar screen in the movie business.

Players to Watch: Disney and its myriad film arms will try to prop up struggling theme and television divisions to help company rebound from a year in which it’s stock lost a third of its value Local companies on the move include Bill Mechanic’s Pandemonium and Spyglass Entertainment, both set to produce multiple high-profile films in 2002 Look for independent Artisan to seek an entrenched partner. And of course, there’s Barry Diller, who will oversee all of Universal’s operations though he insists that his role will be more strategic than operational.

Buzz for 2002: Biggest problem for filmmakers in 2002 could be securing financing from banks that have been burned too often in recent years Studios will try to contain the spiraling cost of marketing movies. More than usual, the emphasis will be on cost-cutting and risk-averse financing Expect a partial rebound in the exhibition industry, where a wave of consolidation and two years of eliminating troubled venues should begin paying dividends Runaway production continues to get more attention, but significant government intervention in the form of tax credits seems unlikely and countervailing tariffs against Canada are unrealistic.

A number of high profile sequels (“Harry Potter and the Chamber of Secrets,” “Star Wars Episode II: Attack of the Clones,” and Men in Black 2″) bodes well for another record year of domestic box office receipts. Job cuts of 2001 not expected to be repeated in 2002.

Don’t hold your breath waiting for widespread utilization of digital projection and distribution in theaters this year. But count on DVDs taking up more shelf space at your local video store as studios make more of their libraries available in popular, consumer-friendly digital format.

Grade: B

Darrell Satzman

Health Care

Year in Review: After years of smaller adjustments or even decreases, 2001 saw the dreaded return of double digit premium increases Employees and employers grumbled while doctors and hospitals complained they weren’t getting their fair share The result: nasty fights between the state medical association and insurers, all in the midst of intense organizing campaigns of nurses and other hospital workers.

Players to Watch: WellPoint Health Networks Inc. of Thousand Oaks has been snapping up insurers in Georgia, Missouri and Maryland. It could become the nation’s largest health insurer, but it must convince D.C.-area lawmakers and regulators that swallowing up CareFirst BlueCross/BlueShield will be good for consumers Santa Barbara-based Tenet Healthcare Corp., the nation’s second-largest hospital chain, grew its lead in market share by acquiring the Daniel Freeman hospitals in L.A. and could be looking for other hospitals.

Buzz for 2002: Premium increases are expected to accelerate to the 12-percent-plus range, driven by rising drug and technology costs while providers seek higher reimbursements Look for insurers to take some of the weight of premium increases off employers by giving employees more control over how their health care dollar is spent through defined-contribution and tiered benefit plans Providers are readying themselves for an all-out war against cuts in Medicare and Medicaid proposed by the Bush Administration. Hospitals say they can’t stomach the cuts on top of mandates that they seismically retrofit and better prepare for bioterrorism Expect some kind of state initiative coming from providers to prop up failing ER and trauma systems.

Doctors and insurers, meanwhile, are finally talking but don’t look for the California Medical Association’s lawsuit against insurers to be settled anytime soon On the public front, the county finally chooses a new chief for its troubled health services department, which will absorb a sharp decrease in federal aid. County supervisors are considering the radical idea of forming an independent health authority to manage the department, but don’t bet they will loosen their grips that much.

Labor shows no signs of letting up The Service Employees International Union is promising to re-energize its organizing campaign targeting nursing home workers, while both the SEIU and rival California Nurses Association say they will continue to organize registered nurses, who remain in short supply. Expect both unions to battle hospitals in an effort to refine proposed nurse-to-patient staffing ratios, which the state is expected to release any time now.

Grade: D

Laurence Darmiento

Insurance

Year in Review: After a tumultuous 2000 marked by the scandal involving former Insurance Commissioner Chuck Quackenbush, the industry was again turned on its head in 2001 by the events of Sept. 11. Businesses already facing rising property and casualty rates saw stratospheric hikes as the industry absorbed the single largest loss ever State politicians failed to agree on a workmen’s comp benefit hike, prompting a labor group to file papers for a $3 billion-plus initiative Thousands of Northridge quake claims were reopened courtesy of a new law Fifteen candidates lined up to run for the insurance commissioner’s job.

Players to Watch: 21st Century Insurance continues its return to profitability after nearly going bankrupt following the Northridge quake. But it now faces at least 1,200 reopened claims. Expect the Woodland Hills-based insurer, backed by American International Group Inc.’s deep pockets, to easily weather this storm Still unclear is when Fremont General Corp., the troubled Santa Monica-based workmen’s comp insurer, will emerge from voluntary state supervision Meanwhile, Los Angeles-based Farmers Insurance Group moves full speed into the brave new world of cross marketing, forming alliances with Blue Cross of California and Bank of America.

Buzz for 2002: Sept. 11 is still the date to remember as businesses renew property and casualty insurance. Depending on the industry, businesses will be hit with rate hikes ranging from a few percent to many times that as insurers take advantage of a worldwide loss of insurance capacity exacerbated by the terrorist attacks.

Investors looking for returns higher than global stocks are filling the gap, forming new insurance companies that will provide rate relief, although not this year Workman’s comp relief is not on the horizon, as State Senate President John Burton and his labor allies push for an initiative that would hit businesses with a huge benefit increase all at once. This looks to be a big stick Burton is wielding against Gov. Davis in effort to get simpler legislation that would at least phase any increase in This also could be the year that Northridge quake claims are finally settled as insurers take their case against a law allowing claims to be reopened all the way to the U.S. Supreme Court A win there would end the matter, but a loss could open the way for class action suits Meanwhile, count former insurance commissioner John Garamendi among the leading candidates who have entered the race for his former job. But don’t forget Assemblyman Tom Calderon, former Orange County Assemblyman Tom Umberg and former L.A. Deputy Mayor Gary Mendoza. Or the political albatross around Garamendi his role in the Executive Life fiasco while commissioner.

Grade: C

Laurence Darmiento

International Trade

Year in Review: First contraction since Asian economic crisis of 1998 Exports through L.A. Customs District hit hard, declining 7.5 percent Imports eked out a 0.5 percent increase.

Players to Watch: L.A.’s big three trading partners (Canada, Mexico and Japan), along with Chinese manufacturers exporting to the United States, Korean carmakers.

Buzz for 2002: After contracting 2.2 percent in 2001, look for two-way trade volume through L.A. Customs District to increase but just barely Value of cargo coming through L.A. in 2002 will creep up a percentage point or two from the $225 billion this year… Shippers showing preference for higher-volume ports, like those in L.A., through which they can consolidate several related shipments.

Primary driver, as usual, will be imports. American consumers regain appetite for imported clothing, electronics and cars But demand will be for value. That trend favors lower-cost Asian imports over European goods, giving West Coast ports an edge.

Serious overcapacity problem will emerge as major issue. Not enough product to fill ever-larger ships coming onto the market Look for major consolidation in 2002 that could trigger the need for local ports to do some reshuffling of tenants to better align merged shipping lines.

April 14, when Alameda Corridor opens, and July 1, when International Longshore and Warehouse Union’s contract with shippers expires With global recession and industry overcapacity, look for shippers to have upper hand in contract talks Look for short-term rise in import volume in late spring and early summer, as national retailers build inventories in anticipation of possible West Coast shutdown.

Worsening imbalance between import and export flows exacerbates buildup of containers around port-adjacent communities Shipping lines increasingly look to leave containers behind at West Coast ports, rather than haul them empty back across Pacific.

On political front, Long Beach elects new mayor in 2002, although termed-out Mayor Beverly O’Neill runs write-in campaign New mayor to change power dynamics between city and port Security issues to remain near top of agenda at all local ports Controversy to swirl around proposals, such as requiring dockworkers to carry identity cards.

Late in year, U.S. recovery will start rippling overseas, triggering small rise in exports. On import side, most interesting force will be China New membership in World Trade Organization to be impetus to deal with rampant intellectual property piracy Most worrisome overseas scenario: Japan. Cars continue to be Japan’s primary export into L.A., but Americans finally warming up to Korean-made cars as product quality improves.

Grade: C

Michael Stremfel

Law

Year in Review: A year of big hits both good and bad. O’Melveny & Myers was on the wrong end of a $100 million malpractice lawsuit by the LAUSD over Belmont Learning Center Local partners at Squadron Ellenoff Plesent & Sheinfeld handled the sale of Fox Family to Walt Disney Co., as well as negotiations between News Corp. and Hughes Electronics for DirecTV Corporate practices, already slowing in the fall, took a major hit following Sept. 11 as firms shifted attorneys to other practice areas. Bankruptcy work escalated, spurring firms to beef up those divisions Former U.S. Attorney Alejandro Mayorkas joined O’Melveny Gibson Dunn & Crutcher managing partner Wesley Howell Jr. and chairman Ron Beard announced their resignations Brobeck Phleger & Harrison’s L.A. litigation head, Richard Odom, took the helm of the struggling San Francisco-based firm.

Players to Watch: New L.A. City Attorney Rocky Delgadillo, who expects to streamline the office’s work with private industry. This includes encouraging investments in abandoned properties and managing workers compensation claims Los Angeles Police Chief Bernard Parks, whose contract is up in June Richard Odom, new chairman who will lead Brobeck into 2002 from L.A. Whoever is named managing partner and chairman of Gibson Dunn Attorneys David Steuber and Kirk Pasich at Howrey Simon Arnold & White’s L.A. office who have been at the forefront of handling insurance claims filed after Sept. 11.

Buzz for 2002: L.A. law firms aren’t expected to regain pre-recession level of work until summer Firm mergers and layoffs likely early in the year, although L.A. is expected to do better than most legal centers Possible shakeouts at O’Melveny (slow economy) and Akin Gump Strauss Hauer & Feld (following merger with Troop Steuber) and the possible closure of the L.A. offices of Cleveland-based Arter & Hadden Mergers possible among Mitchell Silberberg & Knupp and Squadron Ellenoff Coming out on top next year could be Manatt Phelps & Phillips (aggressive expansion) and Latham & Watkins (long-desired national prominence has been achieved) Corporate lawyers will be poring over security clauses in commercial real estate deals L.A. litigators will have a share of the lawsuits against terrorists and airlines growing out of Sept. 11 Government and public policy work is expected to skyrocket Bankruptcy work will continue to increase with hiring among L.A. firms.

Grade: B

Amanda Bronstad

Local Media

Year in Review: A year most would rather forget As the economy declined and dot-coms disappeared, so did the robust advertising revenues of 2000…Companies turned to layoffs and other cost-cutting measures to offset the declines. The Los Angeles Times laid off some employees, offered voluntary retirement packages to others and shut down three of its community newspapers Clear Channel Communications Inc. announced plans to shut down its L.A.-based interactive division and fire about 150 employees…The Sept. 11 attacks made a trying year even tougher. Radio and television stations lost millions of dollars during the days of commercial-free news coverage that followed.

Players to Watch: David Woodcock, latest in a line of executives brought in to turn lagging KCBS-TV around… Roy Laughlin, a regional vice president for Clear Channel Communications Inc. who supports the practice of filling air time with prerecorded material… Monica Lozano, president and chief executive of La Opinion. Spanish-language newspaper continues to grow in circulation despite tough market conditions.

Buzz for 2002: Nervous advertisers will make this a tough year, especially in the first quarter. Advertisers will hold back on spending scarce dollars until the last minute, making it harder for media outlets to set their budgets for the year

Though most stations and newspapers are running lean, they will seek to further contain costs through layoffs or hiring freezes… An expensive governor’s race and controversial ballot initiatives will provide a much-needed ad infusion to newspapers and broadcast outlets Radio also can expect a boost from political spending and advertising for the February sweeps period… KNBC will see a temporary jump in ratings and ad revenues thanks to the Winter Olympics.

The Super Bowl, being aired by Fox, won’t do much for KTTV. The network is having a hard time selling all the slots for the game…Television stations will fight to replace expensive on-air talent with less experienced or nonunion employees… Struggling Big City Radio Inc. may sell off one of its three L.A. stations in order to pay off its loan debt. Hispanic Broadcasting Corp. appears most likely to buy a station in L.A. this year… KCOP is expected to shut down its news operation… NBC’s purchase of Telemundo likely will lead to the sale of local KWHY-TV.

Grade: B-

Claudia Peschiutta

Manufacturing

Year in Review: Local employment held steady, slipping just over 1 percent to 618,800 from 629,400 a year ago Hits were taken in durable goods markets, furniture and fixtures, which declined to a combined 27,200 jobs from 28,400 a year ago, and in non-durables, which dropped to 95,500 jobs from 99,500 last year.

Smaller apparel firms suffer as energy costs climb, economy slows and imports increase Columbus, Ohio-based Schottenstein Stores Corp. in March purchased the wholesale operations of blue-jean maker Bugle Boy Industries Inc. out of bankruptcy Pico Rivera textile firm L.A. Dye & Print shut doors in February, resulting in 700 jobs lost On the upside, Karen Kane Inc., a Vernon-based young women’s apparel maker, equaled its 2000 sales of $75 million Similar gains at Great Escape Manufacturing Corp., an L.A. children’s wear company, where sales climbed to $75 million from $62 million in 2000.

Players to Watch: Unhurt by the recession were composite material sporting goods makers Expect a boom in 2002. Local examples are Van Nuys-based Easton Sports Inc., which makes bats, and Valencia-based Answer Products Inc., which makes suspensions for mountain bicycles.

John Paul Richard Inc., a Calabasas women’s clothes maker, projects revenues to increase to $135 million from $120 million in 2001 Vernon-based Richter Furniture Manufacturing hired a new designer to create collection of case good pieces and will increase staff to 210 employees from current 190 LL International Shoe Co. Inc. projects 2002 sales of $32 million from $24.3 million in 2001 as the L.A. urban fashion shoe maker unveils its first line of basketball sneakers with a big-name NBA endorsement.

Buzz for 2002: Although decline in factory output has bottomed out, manufacturing will see 2-5 percent job loss through April Textile metal processing, food and chemical processing plants particularly those in Southern California Edison territory will continue to suffer from high energy costs. Companies that survived the 2001 crisis by reducing energy consumption will remain in tact.

More job cuts coming at Guess Inc. Slow but steady overall manufacturing recovery through second half of year, with sector employment returning to 625,000 by end of year Greatest gains in advanced technology, security devices, biomedical and classic defense firms.

John Paul Richards will implement plans to license its brand name 150 retail stores in China with the first 20 to 30 opening in 2002 Charlie Rocket Inc. of L.A. to introduce new lines of clothes for newborn boys and pre-teen girls.

Grade: B-

David Greenberg

Real Estate (Residential)

Year in Review: L.A.’s notoriously tight market helped both single-family and multi-family housing buck the broader economic slowdown. Property values and rental rates showed steady appreciation.

Apartment rents were up 8 percent countywide over last year. Low supply/high demand for apartments in mid-range San Fernando Valley communities (Canoga Park, Reseda) and South Bay (Lakewood, Hawthorne) keeps vacancies low, rents increasing. Tech wreck and market downturn hits luxury spots like Wilshire Corridor the hardest.

Sales prices of single family homes were up about 13 percent countywide, with sales volume up 6 percent Hot areas included 210 corridor (Monrovia, Azusa and Glendora showed 15 to 20 percent annual appreciation) and Westside fringe areas like Culver City and Westchester.