This is the window of opportunity is Los Angeles’ industrial real estate market. Purchase prices as still down, and industrial lease rates are climbing. According to Loopnet, the average asking rental rate per sq ft/year for Industrial properties in Los Angeles, CA as of Jan 14 was $11.00 – representing an increase of +8.9% year-over-year. County-wide, average rental rates in Los Angeles are +0.3% higher at $9.05 per sq ft/year for Industrial properties currently for lease.
Around LAX, in industrial areas like Inglewood, El Segundo and Los Angeles 90045, the volume of available industrial properties was down more than 12% in January. Supply is down, demand is up. The latest Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey show that clear economic improvement is generating new opportunities for profitable investment in industrial space across the state. Industry leaders, developers in all areas (with the exception of the Bay Area’s industrial markets) expect to accelerate development activity, tightening the commercial real estate supply.
The increased optimism in many sectors can be tied to job growth in California, especially along the coast, where jobs are being generated at a rate faster than the national average. The current expansion of employment is expected to continue into 2016.
The seasonally adjusted unemployment rate in Los Angeles County decreased over the month to 9.2% in December 2013 from the rate of 10.3% one year ago, notes the Employment Development Department. The California seasonally adjusted unemployment rate was 8.3% in December 2013, down 9.8% from December 2012. The comparable estimates for the nation were 6.7% in December 2013 and 7.8% a year ago.
There is also a strong outlook in the industrial markets for manufacturing and warehousing facilities that support California manufacturing, exports to Asia and Mexico, and consumer goods imported from Asia. With the emergence of the Eurozone and Japan from their recessions and the economic growth in China, there is an increased volume of trade though Southern California ports in particular, which may create an increased demand for warehouse space.
For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – firstname.lastname@example.org or 310.392.1211, and let us move forward together
Here’s a great story of optimism, the revitalization of Inglewood and football in Los Angeles….Stan Kroenke, owner of the St. Louis Rams football team, has purchased land in Inglewood large enough for a new stadium.
The 60-acre piece of land between Hollywood Park and the Forum was previously owned by Wal-Mart, who sold it after being unable to get public approval to build a superstore on the site. Madison Square Garden Co., which owns the Forum, had planned to buy the lot for an estimated $90 million in order to acquire more space for parking and possibly additional development. However, rumor has it that MSG was informed by Wal-Mart at the end of 2013 that the land had already been sold to an unnamed party. (For the record, Kroenke, a former Wal-Mart board member and husband of Ann Walton Kroenke, daughter of Wal-Mart co-founder Bud Walton.) For years, Kroenke has owned a substantial amount of land in Southern California.
“It would not surprise me at all that there would be interest in a football stadium,” offers Inglewood Mayor James T. Butts. “We have been the home of sports teams before, and we have experience working with sports franchises.”
Some say Kroenke is merely using the land purchase in Southern California as leverage in negotiations with St. Louis officials over proposed improvements to the Edward Jones Dome, the team’s current stadium.
The Rams have been unable to work out a stadium deal in St. Louis, and, according to the terms of their lease, are able to move after the 2014 season. Last February, the Rams won an arbitration case against the St. Louis Convention and Visitors Commission concerning upgrades to the Edward Jones Dome. The commission proposed spending $124 million to bring the venue up to date, but the Rams said the necessary renovations would cost about $700 million.
Kroenke’s purchase of the L.A.-area land puts additional pressure on St. Louis to come to the bargaining table or risk losing its NFL team.
The Los Angeles Times notes that the plot isn’t enough to build both a stadium and adequate parking. An adjacent 238-acre site is owned by Stockbridge Capital Partners, which intends to transform the recently closed Hollywood Park Racetrack into a modern residential community named Hollywood Park Tomorrow, with development beginning this spring.
Inglewood is centrally situated near multiple freeways and the Los Angeles International Airport, he said. “If there is to be interest by the NFL, we have the most desirable location,” shares Mayor Butts.
A recent story in the Pasadena Star-News emphasized how the Rose Bowl might temporarily host an NFL team, offering a buffer for any team looking to move to the Los Angeles area, allowing them play in Pasadena at The Rose Bowl while a stadium is built elsewhere.
The Rams began play in the NFL as the Cleveland Rams in 1937, then moved to Southern California and became the Los Angeles Rams in 1946, playing at the Los Angeles Coliseum and later in Anaheim until after the 1994 season, when the team moved to St. Louis.
It may look like a Disneyland attraction, but this new automated garage, will allow you to store a lot more vehicles in a lot less space. The parking garage of the future, is now being tried in Santa Monica. It allows you to park a lot more cars in a lot less space because no driving is involved. The “West Coast’s first automated parking garage” is moving cars around the UCLA Santa Monica Outpatient Surgery Center. Drivers can leave their cars at six bays, where a movable platform takes the car to a crane. The 8,000-pound crane then lowers the car onto one of six levels. Employees swipe their driver’s license or a badge to retrieve their cars, while the public will use a credit or debit card (the garage will open to the public when all the kinks are worked out). Usually the cars can be retrieved in two minutes and people seem happy with the system:
One of the best aspects of the robot garages, other than never losing your vehicle or dealing with break-ins, is they hold more cars than a typical garage and can be built smaller. West Hollywood and Chinatown both have automated parking garages in the works.
by Jodi Summers
We meet a lot of inspectors in the day-to-day business of real estate. As we were inspecting a 17,000+ sq.ft. warehouse with a buyer, it was obvious the property had experienced some significant deferred maintenance. As the inspector was pointing out rust blossoms in the pipes, and homemade electrical upgrades, we got to talking about commercial real estate preventative maintenance.
“It’s good for all buildings to have a risk assessment,” the inspector shared. “That way you know what you’re getting, about how long it will last, and it will give you an idea of how much it will cost you.”
A risk assessment usually includes an evaluation the 5 major systems involved in the day-to-day operation of a commercial facility – plumbing, electrical, heating and air conditioning, structure and roofing. Add to that any gear required for business specialization as well as obvious deferred maintenance issues.
A risk assessment examines three aspects of each of the 5 systems:
- Expected useful life left in each system.
2. Maintenance/Repairs that are needed immediately for each system.
3. Total costs that are expected over the next five years for each system.
The stringent new mandatory restrictions on greenhouse gas emissions by power plants, factories and other industrial sources is being heralded as the greatest environmental initiative of Barack Obama’s presidency,
“We limit the amount of toxic chemicals like mercury and arsenic and sulfur in our air and water,” declares President Obama. “But power plants can still dump unlimited amounts of carbon pollution into our air for free. That’s not right, that’s not safe, and it needs to stop.”
Industrial facilitates currently account for around 40% of all greenhouse gas emissions across the U.S. This latest addendum to the host of green 2020 initiatives is to reduce greenhouse gas emissions by 4% below 1990 levels.
Residential properties benefits by this new initiative as it encourages the Department of Interior to approve enough renewable energy projects on public lands to power 6,000,000 homes by 2020. The Initiative also offers $8 billion in loan guarantees for energy efficiency and advanced fossil fuel projects.
“This is the change Americans have been waiting for on climate,” praises Sierra Club president Michael Brune. “President Obama is finally putting action behind his words.”
Already President Obama has been praised for his first term green triumph > steering automakers to double gas mileage standards for daily driver vehicles. Now, the President is requiring stricter standards for heavy duty truck models introduced in 2018 and after…and he can do it all without congressional approval.
In 2007, U.S. Supreme Court ruled that the Environmental Protection Agency-part of the executive branch under the White House-can regulate carbon dioxide under the Clean Air Act – just like it does with soot, lead and other types of air pollution. Thus, Obama’s new plan does not need Congressional approval, but expect congressional input in determining just how the emissions cuts are implemented.
“It’s clearly time to act,” Gene Karpinski of the League of Conservation Voters (LCV) adds, “and [Obama is] setting out a bold, ambitious, comprehensive plan for what he can do without needing to rely upon Congress.”
On the list of 2014 New Year’s resolutions – invest in industrial real estate in the Los Angeles area. The experts say rents are expected to grow by more than 25% in the next four years…2018 will be so prosperous.
Here’s why the price hikes are coming…
1. The National Retail Federation projects 2013 holiday sales to reach $602.1 billion. Analysts tracking holiday sales expect online shopping to account for nearly 40%, of all spending this year, This is up from 26% in 2012, and well ahead of expectations…which is why UPS was having such significant delivery issues in the 2013 holiday season. Nobody anticipated a 14% jump in deliveries.
Industrial space is being designed and located where it can meet the needs of online retailers with ever faster delivery times.
2. The Panama Canal Expansion
The Third Set of Locks Expansion of the Panama Canal doubles the capacity of the Panama Canal by 2015 by allowing more and larger ships to transit.
The $5.2 billion project creates a new lane of traffic along the canal by constructing a new set of locks. Ships as large as 12,000 or more TEUs (20-foot equivalent units—a measurement of container ship capacity) will be able to fit through the new locks vs. the 5,000 TEU ships that currently transit the Canal (which opened in 1914). The Canal is owned by Panama and is currently used more for Latin American shipping. The country anticipates that the expansion of the 100-year-old canal to make Panama a first-world country.
Pundits, forecasting the impact on our local ports have concluded that the Ports of LA and Long Beach are the most efficient port system in America and will “remain the leader for the foreseeable time,” thanks to our state-of-the-art ports and an efficient supply chain.
Locally construction to accommodate the expansion includes the $649.5-million replacement for the Port of Long Beach’s Gerald Desmond Bridge, to be completed in 2016.
It’s not just here in Metro Los Angeles, where our economy is larger than Saudi Arabia.(We’re top 25 on a worldwide scale.) The demand for industrial real estate is rising across the country, especially around ports on the East and West Coasts. The experts say demand is strongest in Los Angeles, Miami and New York-New Jersey. The growth of e-commerce is having significant impact on the industrial market as the trend towards bigger and more efficient distribution centers has resulted in a shortage of class A warehouse space over 500,000 sf in the nation’s logistics hubs.
During the third quarter 2013, five large Industrial buildings totaling 767,673 square feet were completed in the Los Angeles market area. Total Industrial inventory at the end of 3Q 2013 was 988,123,598 square feet in 36,936 buildings, according to Costar in their most recent market report. The Flex sector consisted of 61,485,351 square feet in 2,810 projects. Within the Industrial market there were 4,830 owner-occupied buildings accounting for 195,937,860 square feet of Industrial space.
Despite steady demand, rents overall remained at stubbornly low levels, in part because the recovery favors newer product. After marginal growth in 2013, the experts anticipate that 2014 will see strong appreciation in most major markets.
Los Angeles, because of our significant land constraints and relatively little new construction, will be the big winner. Warehouse vacancy is at its lowest rate in four years, declining ten quarters in a row after peaking in the first quarter of 2010. Los Angeles and Orange County’s rents are expected to grow by more than 25% in the next four years.
For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – email@example.com or 310.392.1211, and let us move forward together.
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