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Health care, tourism are protagonists in the tri-county recovery story

By   /   Friday, January 6th, 2012  /   Comments Off on Health care, tourism are protagonists in the tri-county recovery story

Tourism, health care are the bright spots, while retail and housing are question marks.

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For many business owners I’ve talked to over the holidays, 2011 was a pretty darned good year. Revenue stabilized or rose a bit, the bottom line got healthy, and in some cases there was a little hiring.

Those who succeeded in 2011 were typically companies that were able to find the right niche and not fight their way to the bottom of the pricing food chain.

Patagonia is a great example of a company that’s built a reputation for quality and green business practices, and in the process created millions of loyal customers. Our agribusinesses have turned avocados, lemons and now raspberries into year-round crops and built enormous followings.

Are we finally seeing the green shoots that Federal Reserve Chairman Ben Bernanke talked about back in 2009?

I’m not totally sure that the Central Coast is completely out of the woods. But I’m pretty sure that 2012 will see an extension of several key trends that began to emerge last year. Here are seven of them:

• Tourism is coming back with a global twist. The hospitality industry recovery that was firmly established last year is going to go gangbusters in 2012, especially on the South Coast and in San Luis Obispo County. In addition to increased domestic travel, global visitors will lead the way — Germany has lower unemployment than the U.S. and China’s middle class has money to burn. Upscale and “name brand” destinations will be able to capitalize. [See related story.]

• Health care will spearhead a recovery in commercial construction. The $700 million Cottage Hospital reconstruction project is ready for its public closeup but it’s only 70 percent complete. Community Memorial in Ventura and other projects are coming onstream. A proposed hotel in Grover Beach, the Deckers Outdoor Corp. headquarters in Goleta, the new Santa Barbara courthouse and Limoneira Co.’s East Area I projects in Santa Paula are all in the pipeline.

• Retail is a story of haves and have nots. Wealthy enclaves such as Westlake Village, Santa Barbara, Santa Ynez and San Luis Obispo are looking strong. Santa Maria and Oxnard will struggle. It’s a game of Saks Fith Avenue and Dollar General. The RiverPark retail project in Oxnard with its long-stalled Whole Foods Market will be a significant barometer of the retail recovery. The South Coast will finally get its Target store but construction will just barely get underway in 2012.

• Housing is a mystery. Prices have been falling, distressed properties abound and amid record low interest rates, there are some signs of a bottom. But is the bottom actually here? If you guess right you could make a lot of money — guess wrong and you are in for years of pain.

• California will creep back to solvency — but beware the consequences. In a best-case scenario we would reform public pensions, push back the “bullet train” and open the taps on spending for schools and colleges. But California seldom does the right thing and state tax revenues always lag the economic cycle by a couple of years. So, the pain will likely not go away.

• Economic development will move closer to the top of the agenda for local government. Slow-growth enclaves such as Ventura, Santa Barbara and San Luis Obispo are embracing the start-up culture. Santa Maria and Oxnard are looking to support the mid-sized companies that have been their bread and butter over the years. The dust-up over redevelopment funding means local governments will have to find ways to expand their tax bases—that means encouraging businesses that make a profit and hire people. But the biggest change could come in efforts underway in Atascadero and SLO County to give applicants yes or no answers quickly when they come in for permits.

• Finally, we turn to the banking industry. Profits are back at many financial services firms and the turnaround at Santa Barbara Bank & Trust, our lead institution, has been remarkable for its consistency. My sense is that with regulators encouraging consolidation, we will see a number of deals in the New Year. Shareholders who have made the right strategic investments at the right price will get handsomely rewarded. [See related story].

Reading through these seven items, you can see how much the world has changed during the past four or five years. Your house is no longer a cash register. Once shunned, commercial construction is back on the table.

Stability is returning to banking and economic development is back on the political agenda. Can we count on common sense prevailing in Sacramento? Probably not. But most of us would take a small improvement over 2011 in 2012 and be happy to put it in the books as another recovery year.

• Contact Editor Henry Dubroff at [email protected]

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