Southern California New Construction Comes to a Hault

One drag on recovery in Southern California is illustrated by three new office buildings near the LA-Ontario International Airport. One is 60% leased. The other two sit empty.
Much has changed. "New construction is now literally stopped," said Katherine Aguilar Perez, executive director of the Urban Land Institute's office in Los Angeles. The industry has shed jobs as new building starts have plummeted.

By Jim Carlton -- ONTARIO, Calif. -- One drag on recovery in Southern California is illustrated by three new office buildings near the LA-Ontario International Airport. One is 60% leased. The other two sit empty.

While real estate is in a funk across the U.S., Southern California's economy is more reliant on the construction than many other places. So until these vacant buildings and hundreds of others like them fill up, the prospects for a rebound in construction and the broader economy here are bleak.

At its peak four years ago, construction was the fourth-largest employer in the Inland Empire counties of San Bernardino and Riverside, according to Jack Kyser, chief economist at Los Angeles Economic Development Corp., a nonprofit research group. The housing industry contributed more than $24 billion in revenue to the Southern California economy in 2008, or more than double the U.S. gross revenue from Hollywood movies, according to the Building Industry Association of Southern California.

Much has changed. "New construction is now literally stopped," said Katherine Aguilar Perez, executive director of the Urban Land Institute's office in Los Angeles. The industry has shed jobs as new building starts have plummeted.

The greater Los Angeles area has lost about 90,000 construction jobs, or about 15% of the total in the past year, more than any other metropolitan area, according to the Associated General Contractors of America. The Inland Empire, east of Los Angeles, has lost about 60,000 construction jobs since 2006, or 49% of its total, according to John Husing, a consulting economist in Redlands, Calif.

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SOURCE: http://online.wsj.com/article/SB124985862195117909.html