How Does OC’s Economy Compare to the Last Cycle Peak?

Is Orange County’s economy different today than it was at the last cycle peak? A new report from JLL reveals the differences between 2007 and 2019. The report shows that the Orange County economy is more diverse today and overall, the market is stronger today than it was in 2007.

“Local economic growth in the years leading up to and through 2007 was heavily weighted on financial services, specifically the mortgage industry which experienced much of its growth from subprime mortgage companies,” Jared Dienstag, research manager at JLL, tells GlobeSt.com. “Many of these companies were experiencing tremendous growth requiring them to keep hiring more and more employees. In fact, this growth impacted new office development with developers confident they would be able to lease up the space. The fast pace growth of the mortgage industry also led to expansion in construction activity, due to the high volume of new home, office, and retail development. Current economic growth is significantly more diversified than in 2007.”

In 2007, because financial services dominated the market and therefore the office sector, when those companies collapsed, it had a crippling impact on the market. “During the previous cycle, it was very common for mortgage companies to quickly expand their office footprints in order to keep up with their hiring sprees, with many of these space expansions being very significant,” says Dienstag. “Because these companies were leading occupiers of office space and grew so quickly, the market crashed when many of these firms and other related companies went out of business with landlords unable to backfill the vacant space. This practice would not be as risky if it was performed at lower levels.”