Regional Report: The West, for the Most Part, is Growing

CALIFORNIA | #50 | THE ABCS OF CORPORATE RETENTION
California is the place CEOs love to hate. Consistently named the worst state for business by Chief Executive readers, the Golden State also houses the nation’s biggest debt—$2.4 trillion. Its output surpasses all but seven nations. California supplies more agricultural products to the world than any other state and is home to TV, film, video-game and music producers, as well as to Silicon Valley, the engine of the Innovation Economy.

There are warning signals in many of those areas. Most noticeably, VC money, which has fueled a small army of startups, began tailing off last summer. Still, California addresses abound on patents, a proxy for sector robustness.

The Bay Area is thriving. San Francisco has become the world’s most expensive office market as measured by rent increases. Demand so exceeds supply that Oakland—of which Gertrude Stein once wrote, “There is no there there”—has collected the overflow.

In Southern California, advancing industries include healthcare and social assistance, construction, professional and business services, scientific and technical services, and environmental and waste removal, according to the Kyser Center for Economic Research at the Los Angeles Economic Development Corporation.

The economists at the Anderson School of Management at UCLA point to a decidedly mixed-bag future. Innovation from the research departments at Stanford and other institutions supply California with innovation, fueling its GDP. “L.A. is seeing a little bit of a tech boom,” says native-son relocation advisor Seth Martindale of CBRE. “Even downtown is undergoing revitalization. There are a lot of smart young, educated people, and companies taking advantage of the fact that L.A. is cheaper” than Seattle, Portland and San Francisco.

San Diego continues to grow its biotech hub, attracting a broad range of high-tech companies glomming onto its labor market, sunshine and lifestyle. Recent arrivals include Bizness Apps, GoPro and Wrike. Earlier this year, local biotech BD announced an in-town expansion that would keep over 3,000 jobs local.

Still, there’s significant churn in a state where the acronym ABC could mean “Anyplace But California.” Executives, middle managers and salaried employees alike are seeing incomes stagnate. Real personal income growth is estimated at 3.6% this year, slipping to 3.2% next year and 3% in 2018. It’s no surprise that California business owners eyeball locations across their borders and fantasize about less expensive, less congested and less regulated places to do business—but usually stay put.

WHY WE’LL BE HERE

WHO Mark Riddlesperger, Founder and President, LA Propoint

SITE HISTORY After a long-term project working for Universal Studios in Japan came to an end, Riddlesperger returned home to Southern California. Working with a business partner, he opened LA Propoint as a designer, fabricator and installer of stage and show systems, museum exhibits and entertainment modules. The company began in a 5,000-square-foot warehouse just outside downtown Los Angeles. Seeking more space, it moved to a 15,000-square-foot location in the San Fernando Valley, in 2004. Four years later, when the space next door was vacated, the company moved once more, again doubling its size.

WHY CALIFORNIA “Most of the entertainment companies are here in L.A. Our business involves theme parks, museums, sciences centers and theaters. San Fernando Valley is very desirable because the suppliers, the customers and the talent in the industry are all here. So are our customers. We’re near Warner Bros, Universal and Disney and they are all, or have all been clients.”

REASON FOR LOCATION “Real estate is cheaper than in downtown L.A., and you can get larger spaces. We’re between the St. Gabriel mountains and the ocean, which is very appealing, at a location that’s very close to a major commercial thoroughfare serving the region.”