Beacon Economics is based in Los Angeles.

LOS ANGELES—According to the latest Beacon Economics report, California’s metropolitan areas are all experiencing job growth. The report forecasts jobs will continue to grow, settling at a growth rate of 2.5% in 2016 with unemployment dropping to 6% in mid-2017. Overall, the states economy will continue to see growth through 2019. These results show quantitative and continual economic improvements throughout the state.

Although this is great news, the report did show that the state is experiencing some challenges, specifically with the rising cost of housing. Limited supply of new housing is driving costs up, and this higher cost is pushing the labor force out of the state and hindering the state’s growth. According to Jordan Levine, Beacon Economics director of economic research, “You can’t add jobs if there is no growth in the labor force because people are leaving because they can’t afford housing.” The report found that home prices in California would rise by double-digit percentages next year

Helping to fuel the state’s economy, tourism is up throughout the state, and hotel occupancy is at 73.4%, 10% higher than the national average. In Los Angeles, this has driven an increase in hotel development as well, especially in Downtown Los Angeles, which is in need of new hotel rooms for tourists. Recently, the $172 million dual-branded Hilton Marriott opened its doors in after two years in development.

However, the office sector is continuing to face development challenges, and not just in California, but nationwide. Job growth was the major driver of commercial construction in the past, but with technology increases and more workers telecommuting and working remotely, job growth doesn’t drive new construction like it once did. This will be another challenging area that the state will have to address.