1 STAFF REPORT
DATE: April 4, 2023
TO: Justin Hess, City Manager
FROM: Patrick Prescott, Community Development Director VIA: Simone McFarland, Assistant Community Development Director BY: Mary Hamzoian, Economic Development Manager
SUBJECT: Update on City of Burbank’s Economy 2023
RECOMMENDATION
Note and file the Economic Development Update Report 2023.
BACKGROUND
The intent of this Economic Development Update 2023 Report (Report) (Attachment 1) is to provide an overview of the economy in Burbank while looking at our strengths, opportunities, and areas of focus. This Report will act as the first step in a multi -phased process that will help lay the groundwork data for the 2024–2028 Economic Development Strategic Plan which will be developed and presented to City Council in late 2023.
The City of Burbank has a resilient economy. While other cities have suffered from recessions and the COVID -19 Pandemic (Pandemic), Burbank has felt its dips but has come back even stronger. Part of this is due to its proximity to Los Angeles - generally cities like Burbank that are adjacent to larger metropolitan hubs are the last to experience a downturn and one of the first to revive when the economy recovers. The other contributing factor to Burbank’s resiliency is its strong media and entertainment presence.
Burbank is the Media Capital of the World with more than 1,000 media and entertainment companies such as globally recognized Warner Bros. , Discovery, Walt Disney World Headquarters, Nickelodeon, and Netflix as well as smaller creative companies that provide post -production, visual effects, sound, and much more. The media industry continues to grow and so does the demand for content which has created new opportunities in Burbank, including future developments and more jobs.
There is a lot of uncertainty with the state of the global economy, and we are already seeing the impacts trickling down to Burbank. Burbank has five major employers that have announced subleases of their existing office spaces including Netflix, Hasbro, C ast & Crew, WeWork, and Aramark. Specifically, Netflix, the largest announced sublease is
COMMUNITY
DEVELOPMENT
2 looking for tenants to occupy 180,000 square feet of their original 351,000 square feet of space they leased in 2020. Additionally, with the merger of Warner Bros. and Discovery, redundant jobs are being reduced as right -sizing occurs within these entities along with the animation di vision of Cartoon Network that was acquired during the AT&T/Time Warner merger in 2018, and the recent news regarding the layoff of 7,000 Walt Disney Company employees worldwide (the potential impacts to Burbank are still unknown at this time) as part of a $5.5 billion savings drive for the company.
While this will impact the vacancy rates and possibly proposed office developments in the short-term, the media sector in Burbank is strong and the subleases will likely be absorbed by new companies; however, it is too soon to tell how many additional office buildings will be available for sublease as several companies continue to maintain their work from home policies for many of their departments which may require less space in the future.
While the economy is changing, Burbank is currently in a stable economic position with continued positive economic indicators that include growth in existing and proposed development, a low unemployment rate of 5. 5% and high housing demand. What may continue to weaken our economy is the reduction of office use due to ongoing work from home programs , resulting in the subleasing of existing product and the tightening of budgets. Economists still are at odds with each other, some predicting just a slowing downturn while others say a recession is imminent, either scenario creates challenges and opportunities for Burbank’s economy . The Economic Development team is already discussing the best way to pivot efforts and assist with subleasing and attracting new businesses to help the economy remain healthy and strong during these unprecedented times.
DISCUSSION
As stated, the Report provides an overview of Burbank’s economy based on the current economic indicators and trends in the marketplace. Data is focused on jobs, business growth, retail sector, office sector, industrial sector, leisure and hospitality, and housing.
The Report discusses current challenges, opportunities, and the factors that contribute to Burbank’s success, including the efforts of the Economic Development team to facilitate job growth, encourage innovation and entrepreneurship, attract new investment, increase revenues, create vibrant neighborhoods, and support businesses while also anticipating headwinds in the evolving and rapidly changing economic environment.
Later this year , staff will begin the process of updating the Economic Development Strategic Plan (Plan). Staff will work with a consultant to develop the Plan and conduct significant outreach to businesses, stakeholders , and residents . Once a draft Plan is completed, staff will bring it to City Council for consideration.
ENVIRONMENTAL REVIEW
This activity has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and as such, is not a “project” subject to the requirements of the California Environmental Quality Act (CEQA) 14 Cal. Code Regs § 15378.
3 CONCLUSION
Though resilient, Burbank still faces many challenges ahead, the lingering effects of the Pandemic are becoming more prevalent in the office market as Burbank and neighboring cities are feeling the impacts of the ongoing work from home trends along with a potential looming recession.
The City of Burbank has two guiding documents for economic development. The first is the Economic Development Strategic Plan (2018- 2022) (Attachment 2), which was approved by City Council prior to the Pandemic. During the Pandemic, Community Development staff created and presented the Economic Recovery Plan (Attachment 3 ), which was originally presented in October 2020 and updated in February 2021. The Economic Rec overy Plan included goals for Mitigation, Response (2020- 2021) and Recovery (2020-2023) during the Pandemic . Staff has updated the status of the goals developed within the Economic Recovery Plan and continues to work towards implementing those not yet complete under the Response and Recovery sections.
ATTACHMENTS
Attachment 1 – Economic Development Update 2023 Report
Attachment 2 – Economic Development Strategic Plan (2018-2022) Attachment 3 – Status Update to the Economic Recovery Plan