Pasadena’s Fiscal Health Discussed, Analyzed at Chamber-Presented Business and Economic Summit

“Pasadena’s doing okay. We’re not soaring, but we’re not sinking, either,” Pasadena Chamber of Commerce President and CEO Paul Little said early this week ahead of Tuesday’s Business and Economic Summit.

Business and industry leaders gathered at the University Club to focus on innovation and the future of business in Pasadena, and heard from experts discussing big picture issues such as the evolving workplace, the transportation future for Los Angeles County and what the workforce of tomorrow may look like.

Tracy Hernandez, Founding President of the Los Angeles County Business Federation (BizFed) will deliver an economic overview that zeroes in on the San Gabriel Valley and Pasadena.

Hernandez will also present findings of a recent industry survey and discuss upcoming issues facing local businesses.

“Pasadena is an interesting mixed bag of prosperity and pressure. We want to determine what are the most pressing concerns of business owners’ ongoing operations and ability to grow right here in Pasadena,” Hernandez said.

According to the Chamber’s Little, the main sectors driving Pasadena’s economy in 2016 are the technology, retail and hospitality sectors.

“The tech community here is growing — and that’s positive,” said Little.

Pasadena-based tech firms like OpenX, SupplyFrame, Ayzenberg, Wallaby (now Bankrate) and Spokeo are experiencing rapid growth, according to District 7 Councilmember Andy Wilson, who himself is the CEO of tech company Rexter.

Pasadena is also seeing a growing number of new arrivals of established, mature tech firms including Alibaba, WeWork and Everbridge that are bringing jobs and occupying commercial real estate.

“This is particularly exciting as with each new high-tech job in a city, five additional jobs are ultimately created outside of the high-tech sector in that city,” Wilson explained. “This is all with the longer term view of better aligning the local job stock with the people who live in Pasadena, so fewer people will be faced with painful commutes and might also adopt alternative transit modes (walking, biking, mass transit) to get to their high quality local job.”

“The tech folks that come to Pasadena are different to some degree from the ones on the westside or even Silicon Valley. These aren’t folks who are trying to create the next ‘Pokemon Go.’ They’re really looking at something that’s going to develop over the long term,” said Little.

A surprising number of tech companies are gobbling up office space.

Pasadena’s commercial real estate office leasing vacancy stands at just over ten percent in comparison to 16 percent vacancy in downtown Los Angeles and Burbank and 19 percent in Santa Monica, according to Little.
City officials are also upbeat.

“We always have hope for improvement along many parts of Pasadena, but we are fortunate that we have a healthy occupancy rate. Between the commercial businesses that are in commercial buildings and leasing space, Pasadena fares very well compared to other communities,” said City of Pasadena Economic Development Manager Eric Duyshart.

Interestingly, in today’s technology-driven environment, company growth does not always result in a growth in workforce size.

“Companies have become more efficient in the use of their space. We’re seeing companies that are growing and adding staff, but need less square footage. That has been a trend that is not exclusive to Pasadena, but it has an impact on how commercial space is being utilized,” explained Duyshart.

The desirability of Pasadena commercial space is checked, to a degree, by its cost.

“I hear from business owners from different sectors in Pasadena that affordable office space rates are critical,” said Pasadena Chamber of Commerce Chair Ishmael Trone, who himself is owner of F&M Business Center.

“We need to continue recruiting retailers to keep demand for office space and market Pasadena as a destination retail city. We have competition now,” said Trone about nearby downtown L.A.’s efforts to revitalize low income areas to lure retail development and shoppers.

“We’re going in the right direction,” Trone said.

The life span of businesses in Pasadena remain steady.

“We lose as many as we gain,” said Little, who pointed to several major recent restaurant developments on South Lake Avenue. “New businesses draw people to the area and will then start to recharge the interest among retailers and others too,” said Little.

Pasadena’s retail scene is an undeniable destination for shoppers in the San Gabriel Valley, and retail brings sales tax revenues back to the city.

The city saw a 2016 first quarter benchmark year ending with sales taxes totaling $29,906,250, according to city documents. 21 percent of the tax revenue came from restaurants alone and accounted for nearly $6 million. The city’s estimated buying income (EBI) was $5,106,684,603.

“The holiday season is the profitable for most retailers. If they have a healthy holiday season, they have a healthy bottom line for the year. If they have a slow holiday season then they typically have a slow year. Indications are that this year will be just fine,” said Little.

The impact of the recent increase in the minimum wage that went in effect in July has yet to become known on a large scale, but some business owners have adjusted in subtle ways.

“The extra fifty cents an hour has been difficult to gauge because it’s only been a couple of months. I know that there has been a shrinkage of opportunity with a lot of the folks who employ minimum wage people. I’ve seen restaurants and retail stores be open for fewer hours,” said Little.

Employees are feeling the effects directly.

“Ultimately what it means for the workforce is fewer hours,” said Little. “We’re looking at surveying folks in the spring time to find out how the have coped and what the effects have been. You have to give it time to actually get data,” said Little about obtaining data in regards to the impact of the minimum wage increase.

Stacey Ober owns Union Street Sandwich Company and is optimistic about the economic health of the city and the playing field it provides for her small business that is young, but surviving.

“I have a really positive outlook. I’m seeing construction all over the area and an increase in foot traffic in shoppers throughout the week. There’s a lot of culture here that brings people here on a regular basis,” said Ober.

At the moment there are five hotel projects in various stages of development — The Dusit2 Constance Hotel Phase II on Colorado Boulevard at Mentor Avenue, two proposed hotels at a former car dealership on Colorado Boulevard and Hill Avenue, the Kimpton/YWCA project in the Civic Center, and a new Hyatt Place at the Paseo shopping center.

“These projects benefit the City in several ways. We have a first class convention center that would benefit from having more hotel rooms available to book conventions and gatherings. The hotels at the Paseo and in the Civic Center would help bring new activity and vitality to the area, and the Kimpton project would restore the long-ignored historic Julia Morgan YWCA building,” City Manager Steve Mermell told Pasadena Now last August.

The new projects represent the largest wave of new hotel construction in Pasadena in decades.

The hotel vacancy rate in Pasadena is low, according to Little, with the city seeing an approximate 90 percent occupancy rate on average with increased room price rates since the recession.

“This means that on any given day there are not that many available hotel rooms. There is a need — which is why we’re seeing so much development,” said Little about plans for new hotel developments.

Tuesday’s Business and Economic Summit will feature a moderated panel discussion among the participants. Karl Bird, Acquisition Department Manager at Jet Propulsion Laboratory and chair of the Chamber’s Economic and Business Development Committee will facilitate.

Taking part as featured panelists are Brittany Dodd, senior associate for Advisory and Transaction Services and Workplace Strategy at CBRE, Kim Sidders, People Operations Coordinator with Bolton & Company and Pauletta Tonilas, Chief Communications Officer with Los Angeles County METRO.

Pasadena Mayor Terry Tornek is schedule to provide a welcome and an update on the City’s economic priorities.

Pasadena Economic Development Manager Eric Duyshart will deliver an update on economic development initiatives in the city.

Additional information, including the opportunity to sign up and pay online, can be found at the Pasadena Chamber website at www.pasadena-chamber.org (follow the link to Events and the Business and Economic Summit).

The University Club of Pasadena is located at 175 N. Oakland Ave, Pasadena.

For information call Pasadena Chamber of Commerce at (626) 795-3355 or visit https://www.pasadena-chamber.org/