An insider’s view of the beach cities economy
Bank of Manhattan demonstrates its confidence in the economy with the opening of it second branch. Presiding over the downtown branch groundbreaking last December were Manhattan Beach city councilman David Lesser, bank executive vice president Kevin Campbell, councilman Wayne Powell, chief banking officer Rick Sowers, president and CEO Terry Robinson, architect Jon Starr, KKC Fine Homes contractor Kim Komick, bank vice president Nicole Fitzgerald and KKC’s Pablo Escutia.
by Kevin Campbell
Hardly a day goes by when I’m not asked, “How are the local economy and business?” As a lifelong South Bay resident and career commercial/private/community banker, I have come across a wide variety of economic situations over the last year. The good news is I do believe things are better economically. Local real estate, small and mid size businesses and the high end market seem to have improved.
The local real estate market has improved due in part to low interest rates, pent up demand and an influx of dollars that have been on the sidelines for the last few years. The low interest rates have spurred a refinance boom in the last 12 to 18 months for those who could qualify and have their home values substantiated with appraisals. Well qualified buyers are able to shop various mortgage sources and find attractive financing options from lenders.
The lack of activity in the housing market the last few years has created a pent up demand among real estate developers, from the Hill to the Westside. The increase in activity in the last four to six weeks is evidenced by numerous “multiple offer” situations for appropriately priced homes. Developers have returned to the game looking for developable lots to build “for sale” housing. “Sideline dollars” have come back to the market as proven by the large number of “all cash” closings, estimated at over 40 percent in the latest six month reporting period.
Some local small and mid size businesses have seen an uptick in business over the last two to three quarters. Many business owners have started to focus on their top line sales growth after dealing with the prolonged recession of the last three years. So much focus has been on the expense side of the ledger that it’s refreshing to see the comeback of top line sales growth as a focus for local businesses. Business owners have increased capital expenditures for new facilities, equipment, and have even increased hiring. Several local companies have brought back manufacturing that had been shipped overseas in recent years. While I don’t know that this increase in local manufacturing will be a long term trend, it certainly has garnered the attention of the politicians who are back to a “made in the USA” political platform. Being an election year, jobs and job growth are back on the politicians’ minds.
Many local businesses are still frustrated with my business (banking) and the lack of credit availability from the banks, both big and small. The good news is that most banks’ balance sheets are cleaning up and their willingness to lend money seems to be improving. Talking to my counterparts at both large and community banks across the state there is a common theme. “We want and need good assets (loans) but we are not going to sacrifice our credit quality”. For local business that need credit this means you must be profitable, have a good balance sheet, and strong cash flow. The commercial/business banking business has not gone back to the “ go-go” days of lending pre-2007 but there certainly is more of willingness to lend.
Another bright spot in the local economy has been the “high end restaurants” of the South Bay. Securing a table at Palmilla, MB Post, or the Strand House can be challenging, showing that people with money are out spending. An interesting phenomenon of the recession has been the consumer loyalty to local “brands”. Well established l restaurants like Hennessey’s, Mama D’s, Fonz’s, Good Stuff have weathered the financial crisis as they adhered to their core business of taking care of their local customers and offering value and personalized service.
As a lifelong local, it has been fascinating watching the transformation of downtown Hermosa Beach with the outstanding new street improvements and the new higher end shops and restaurants. While having lunch recently at the HT Grill in Redondo you could see the economy bouncing back with both shoppers and diners. I think the new Zislis Shade Hotel in Redondo’s King Harbor will also be a great addition to the area. Meanwhile, downtown Manhattan Beach continues to attract new businesses, including restaurants, retail shops, flex office space as people want to live and work in their community. I have watched first hand as true “local owned businesses” like Strand Brewing have started in our backyard going “door to door” selling their product and have experienced tremendous growth during the recession.
Speaking of “Door to Door”, how about the amazing growth of the Veera’s family business Door to Door cleaners? And can enough be said of the success of Skeechers and the continued support of our community charities by the company and founders.
From the Hill to El Segundo, the South Bay is a great place to live, work and shop. Outstanding schools, world class beaches, superb dining and shopping. There is a reason why so many professional athletes, entertainment industry types, successful entrepreneurs and regular “beach people” want to live here.
To answer my opening question, I do think the economy is getting better and it’s incumbent on all of us to support our local businesses.
Kevin Campbell is a founder and executive vice president of Bank of Manhattan. He is also a lifelong beach city resident.