Aerospace Shoots for the Stars in the New Economy of Los Angeles

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One hundred years ago, Los Angeles residents stood at the corner Wilshire and Fairfax — today a bustling mid-city intersection — watching planes buzz overhead towards a landing in the adjacent runway of the newly established Charlie Chaplin airfield. Since then, the footprint of the region’s aerospace industry has shifted, and the airfield is long-gone. But, the region’s position at the forefront of advances in air and space remains as strong as ever.

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From the very beginning, the area’s growth has been closely linked to that of the aerospace industry. In the World War II era, Southern California was central to the country’s war efforts: 300,000 airplanes were produced by the region’s 2 million aerospace employees. After the war, SoCal’s defense linkages remained strong as missile production and other advanced technologies gained importance throughout the Cold War. The region’s fortunes were especially buoyed by its incredible talent base linked to institutions like UCLA, CalTech and the Jet Propulsion Laboratory.

As the Cold War came to an end, SoCal’s aerospace industry began a prolonged — and oftentimes painful — transformation of its economic base. With fewer defense contracts and manufacturing shifting elsewhere, regional aerospace employment declined significantly resulting in a loss of 155,534 aerospace jobs in the area between 1990 and 2000.

Since then, the aerospace sector has redefined itself, mirroring the region’s economic evolution towards creative, high value-add occupations. In the aerospace sector, this has meant a pivot away from airplane manufacturing towards engineering and advanced R&D. Today, Southern California’s aerospace industry remains a vital artery for the local economy with the Aerospace Industries Association (AIA) pegging the economic output from SoCal’s aerospace industry at more than $123 billion in 2017.

The industry’s transition towards engineering and R&D has been especially driven by regional advancements in space technology: from 2010 to 2018, firms that specialize in guided missiles and space vehicles added a staggering 8,139 jobs in the area (an increase of nearly 400 percent). The shift reflects changing federal government priorities, as billions of dollars in funding have been directed to the private sector in order to develop the next generation of manned spacecraft. With groups such as JPL, SpaceX, Rocket Lab and Virgin Galactic all headquartered in the region, Southern California’s space sector generated $61.6 billion in revenue in 2012, or 21 percent of the U.S. space industry revenue, according to data from LAEDC.

The industry’s footprint is vastly different than the scattered airfields of 100 years ago, reflecting the sector’s crucial role in the regional economy. Aerospace firms occupy a little over 23 million square feet of office and industrial space in the area (comparable in size to the regional media industry footprint), 36 percent of which are owner-occupied. Since 2015, over 3.3 million square feet of space has been leased by aerospace and defense firms across the region. Amidst the COVID-19 global pandemic, it is unlikely Southern California’s space sector will be grounded given the close ties to federal funding sources. While manufacturing jobs tied to passenger aircraft manufacturing may suffer, space-related employment was insulated during the last downturn– expanding by 4,885 jobs between 2008 and 2011.

A couple of weeks ago served as a vivid reminder of the new role of Los Angeles’s aerospace sector. On May 30, two astronauts rode a rocket into space, the first domestic-based launch since the space shuttle was retired in 2011. This historic event was rooted in Southern California: the astronauts rode a Falcon 9 rocket designed by SpaceX, based in Hawthorne, CA. The successful mission served to underscore both the saliency of the region’s aerospace base and its century-long evolution. As Los Angeles’s new economy matures and cements its shift towards a creative economy, aerospace is a key propellant of reaching for the final frontier.

Eric Willett is Pacific Southwest Director of Research and Thought Leadership at CBRE.