Jodi Summers = Industrial Real Estate

SOCAL INDUSTRIAL REAL ESTATE SNAPSHOT ~ APRIL 2013 ~ INDUSTRIAL WILL IMPROVE 4 THE NEXT 3 YEARS

March 30, 2013 on 6:13 pm | In Charts + Statistics, Economy, Investment Opportunities, Market Snapshot, Uncategorized | No Comments

by Jodi Summers

“Demand for industrial space will drive the U.S. economic recovery and California,” heralds the first quarter 2013 UCLA Anderson Forecast.

“Industrial markets are going to be improving over the next three years,” proclaims Jerry Nickelsburg, Senior Economist for the Forecast.

California Industrial Space is the story of two prominent markets: manufacturing and warehousing. Los Angeles covers the gamut. Orange County, San Francisco, East Bay and Silicon Valley are proportionately more manufacturing. The Inland Empire is proportionately more warehousing.

Our recent slowdown has to do with exports, Asia and Europe slowdowns impacted our recovery, keeping the demand for warehousing low. That pendulum is already swinging in the other direction. Port of Long Beach terminals saw a dramatic increase in cargo in February, moving 36.6% more containers that February 2012 ― including a nearly 46% surge in imports and a 17.2% jump in exports.

The Anderson Forecast statistics are further behind. They note that in December 2012, the industrial real estate index turned upward for Orange County, Inland Empire, and East Bay as plans for new additions to industrial space moved forward. San Francisco remained unchanged. Los Angeles and Silicon Valley were waiting to emerge….but now that’s shifted as 1Q 2013 draws to a close.

“We’re expecting an increase of demand of California products in Asia,” noted Nickelsburg, “that increases the demand for industrial space and office space.”

Expectations have become reality. Pundits have an optimistic outlook through 2015 with all of the composite sentiment indices well above an uncaring 50. With its resilient high-tech sectors, Silicon Valley holds its superiority in the industrial space market in California with a composite index of 78, followed by Orange County (76), East Bay (75), San Francisco (74), Inland Empire (68), and Los Angeles (63).

Concluded Nickelsburg, “People are starting to spend more, increasing the demand for warehouse space.”

We’re here to help you with your real estate needs. Please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

And now, enjoy Jerry Nickelsburg, Senior Economist for the UCLA Anderson Forecast talking about the strengthening California industrial real estate marketplace.

http://uclaforecast.com/allenmatkinsCRES/

http://www.socalindustrialrealestateblog.com/?p=1718

http://www.bizjournals.com/phoenix/print-edition/2013/03/29/real-estate-office-industrial.html?s=image_gallery

http://www.cushwake.com/cwglobal/jsp/kcReportDetail.jsp?Country=US&Language=EN&catId=100001&pId=c47500010p

http://www.youtube.com/watch?v=8f1wUAkNMZE

http://www.busjournal.com/content/archives/1210/img/pictures/ucla%20forecast.jpg

SOCAL INDUSTRIAL REAL ESTATE SNAPSHOT – MARCH 2013 ~ GROWTH THROUGH STUFF

March 1, 2013 on 10:18 pm | In Economy, Fascinating Information, Investment Opportunities, Market Snapshot, New Developments, Trends, Uncategorized | No Comments

by Jodi Summers

It’s in the cards. In the future, we’re going to buy more stuff, build more stuff, make more stuff and warehouse more stuff, and these activities will keep SoCal industrial real estate market strong. Experts say the wide array of economic and real estate expansion that we are currently noticing around town will support healthy employment activity over next two years. This year, countywide employment is predicted to grow by 61,000 positions, or 1.6%, followed by 72,000 new hires in 2014, an increase of 1.8%.

Much of this new employment is coming in the way of new construction, and is good for the industrial market. Why kind of new construction, you wonder? Check out these billion dollar projects:

* Our football stadium, Farmers Field, was finally approved by the Los Angeles City Council in a 12-0 vote on September 28, 2012. The $1 billion, 78,000-seat stadium downtown in downtown will double the size of the Convention Center.

Soon, Los Angeles will be able to host an NFL team < this hasn’t happened since the Rams and the Raiders left Los Angeles at the end of 1994.

Construction of the project is anticipated to generate over $1.7 billion for the local economy, and add nearly 20,000 full-time jobs resulting from direct and indirect operations.

* The Tom Bradley International Terminal is undergoing a $1.5 billion renovation and expansion project that will be complete this year. This modern engineering marvel will feature 18 roomier boarding gates with nine built for new-generation aircrafts. The project is using recycled building materials and is expected to achieve a LEED Silver certification from the U.S. Green Building Council, as well as a host of other architecture and design awards.

The passenger experience will be enriched by upgraded customs/immigration and federal security screening areas for more efficient processing, as well as secured corridors so connecting passengers can travel between the New TBIT and Terminals 3 and 4. New state-of-the-art, baggage-handling systems will improve passenger wait times and speed travelers through the ticketing process.

Fyi, LAX is the sixth busiest airport in the world and third busiest in the United States, offering more than 600 daily flights to 91 domestic cities and over 1,000 weekly nonstop flights to 58 cities in 32 countries on nearly 75 air carriers. In 2011, LAX served more than 61.8 million passengers, processed more than 1.8 million tons of air cargo valued at nearly $84.6 billion, and handled 603,912 aircraft operations (landings and takeoffs).

* And the award for entertainment development goes to the Grand Avenue redevelopment project. Plans call for a $3 billion, 3.2 million-square-foot project near the Walt Disney Concert Hall in downtown Los Angeles. The project will include 2,600 residential units, 449,000 square feet of retail space, a five-star hotel, and a 16- acre park. The development is expected to support 5,900 permanent positions. The wide array of economic and real estate expansion will support healthy employment activity over the two-year forecast period. This year, countywide headcounts will grow by 61,000 positions, or 1.6%, followed by 72,000 new hires in 2014, an increase of 1.8%.

* And let us not forget our much-anticipated Expo Line light rail. The Expo Line will run from downtown Los Angeles to Santa Monica in approximately 46 minutes – even during rush hour. The 15.2 mile Expo Line will bring light rail to the Exposition Corridor, with 19 stations. Service on Phase 1 began service to the Culver City station on June 20, 2012. Phase 2 will extend the line out to Santa Monica and construction is scheduled to be completed in 2015. Estimated costs for the project are $930 million for Phase 1 and $1.5 billion for Phase 2. By 2030, an estimated 64,000 passengers are expected to ride the Expo Line each day – which would make it one of the most heavily used light rail lines in the country.

Those with a vision, see our growth. Be a part of the plan, buy more stuff, build more stuff, make more stuff and warehouse more stuff.

http://blog.commercialsource.com/fed-industrial-production-capacity-utilization-up/?om_rid=AAFjw1&om_mid=_BRFBXaB8wsws$y&om_ntype=NARWeekly

http://www.allenmatkins.com/Publications/Videos-and-Presentations/Videos/2013/01/30_01_2013-Winter-Anderson-Forecast-Main-Video.aspx

http://www.socalindustrialrealestateblog.com/?p=1694

http://www.youtube.com/watch?feature=player_embedded&v=avi7aSwzqXE

http://www.costar.com/News/Article/CRE-Sales-Surge-In-2012-As-Pricing-Recovery-Spreads-To-More-Markets/145720?ref=100&iid=323&cid=383F14EEE265B182474DA2442BACBBBF

http://creativenvironments.net/blog/wp-content/uploads/2009/12/grand-ave-2.jpg

http://en.wikipedia.org/wiki/Farmers_Field

http://venturebeat.files.wordpress.com/2012/11/buy-more-stuff.jpg

http://westfieldatlax.com/blog/2012/12/05/premier-dining-retail-coming-to-new-tom-bradley-international-terminal/

http://latimesblogs.latimes.com/lanow/2012/01/lax-renovation.html

http://www.buildexpo.org/

http://www.apartmentupdate.com/index.cfm?fuseaction=markets.main&mktpage=861&login=1

LOS ANGELES INDUSTRIAL REAL ESTATE SNAPSHOT ~ FEBRUARY 2013 > CONTAINER HEAVEN

January 31, 2013 on 9:51 pm | In Bravo, Charts + Statistics, Market Snapshot, New Developments, Trends, Uncategorized, world | 1 Comment

by Jodi Summers

This month, our Los Angeles Industrial Real Estate update is all about cargo containers…both in traditional and non-traditional uses.

Cargo volume at the ports is up for the year, which bodes well for Los Angeles Industrial real estate. The Port of Long Beach was proud to announce that they had their busiest-ever December for container imports, rising and impressive 18.9% over the same period a year ago. Btw, a busy December is not typical, as shippers use this time of year to import goods for the slower winter and spring retail seasons.

“Business at the Port of Long Beach is clearly on the upswing as the economy strengthens and international trade continues to support hundreds of thousands of jobs in Southern California alone,” shared J. Christopher Lytle, Executive Director of the Port of Long Beach.

Currently, an estimated 21,000 shipping containers arrive in the United States every day. Retired shipping containers are abundant in the United States. Port authorities estimate that over 700,000 used shipping containers are stockpiled on prime waterfront real estate without a significant use, purpose, or typical method for disposal, making them ideal construction modules.

Shipping container architecture has evolved as a form of architecture using steel intermodal containers (shipping containers) as structural element, because of their inherent strength, wide availability and relatively low expense. A container is often referred to as a TEU, or twenty-foot equivalent unit. A standard TEU is approximately 20 feet long and 8 feet wide. The most common height is 8 feet 6 inches, an ample ceiling height.

Cargo containers are a rather perfect sized box for building. Made of steel and wood, this product is stronger than conventional framing, stackable for creating levels and is readily available.

“There are a lot of different types of energy efficiency that cargo container-based construction brings to the table,” offered Leslie Horn, CEO of Three Squares real estate development company. “With the U.S. new construction industry desperate for ways to cut costs without undermining quality, green home construction gaining significant momentum, and a growth rate from $49 billion to $140 billion forecasted over the next five years, shipping container-based construction is an extraordinarily well-positioned solution.”

Shipping containers have been called an ideal building material as they are designed to carry heavy loads and to be stacked in high columns. They are also designed to resist harsh environments – such as on ocean-going vessels or sprayed with road salt while transported on roads. As all shipping containers are made to standard measurements and as such they provide modular elements that can be combined into larger structures. Construction involves very little labor. As they are already designed to interlock for ease of mobility during transportation, structural construction is as easy as stacking more containers. Containers can be stacked up to 12 high when empty. They also keep building costs way down. Containers may be purchased from major transport companies for as little as US $1,200 each. Even when purchased brand new they are seldom more than US $6000.

Many structures based on shipping containers have already been constructed, and their uses, sizes, locations and appearances vary widely. In 2000, the firm Urban Space Management completed the project called Container City I in the Trinity Buoy Wharf area of London. The London docklands development is composed of environmentally friendly work studios and live/work lofts stacked on top of each other to create a 5-story building.

Architect Nicholas Lacey and Buro Happold created a flexible design system that relies on component pieces instead of units. Instead of using a 1 container = 1 unit approach, their system relies on components in various permutations to create very livable, adaptable spaces. Aside from this Container City residential project, the system has been used in projects as diverse as classrooms, office spaces, residential units, retail spaces and even youth centers.

“Containers as architecture are just one of the ways in which we can look at objects and find new uses to them. The modular nature of the containers, their adaptability, and the fact that they can be found in industrial surplus make them an ideal prefab material,” noted Urban Space Management.

In 2006, Southern California Architect Peter DeMaria designed the first two story shipping container home in the U.S. as an approved structural system under the strict guidelines of the nationally recognized Uniform Building Code (UBC). This home was the Redondo Beach House and it inspired the creation of Logical Homes, a cargo container based pre-fabricated home company.

They also have a fine use for low income housing. As an MBA student, Brian McCarthy saw many poor neighborhoods in Ciudad Juárez, Mexico. He has since developed prototypes of shipping container housing for typical maquiladora workers in Mexico. And now, people can buy homes for as low as $8,000.

Containers are also used in disaster relief. In 2011, an earthquake in Christchurch, New Zealand devastated the city’s central business district. The Cashel Mall reopened in a series of shipping containers within months.

The use of rudimentary containers to ship cargo began in the late 17th century. By the 1950s, the U.S. military standardized their design, building strong, uniform, theft-resistant, stackable shipping containers that were easy to load and unload by truck, rail and ship, and easy to store. Now, containers are not just for shipping anymore. In the future, the cargo container will contribute to construction in a variety of ways.

http://www.nydailynews.com/new-york/dead-stowaways-suspected-container-ship-docked-newark-new-jersey-report-article-1.1103115

http://upload.wikimedia.org/wikipedia/commons/c/c1/NomadicMuseumSantaMonica.jpg

http://www.socalindustrialrealestateblog.com/?p=1635

http://en.wikipedia.org/wiki/File:Stefan_Beese%27s_Eco_Shipping_Container_Lounge_by_Melissa_Carrier.jpg

http://www.thecompliancecenter.com/blog/2012/11/07/re-use-of-shipping-containers/

http://www.theatlanticcities.com/design/2012/05/shipping-container-city-boom/1983/

http://www.toptennewhomecommunities.com/blog/container-homes-thinking-out-of-the-box/

http://www.socalgreenrealestateblog.com/?p=2568

http://savannahnow.com/exchange/2008-09-27/firm-turns-shipping-containers-homes

http://renaissanceronin.wordpress.com/2008/11/01/drumroll-please-welcome-the-8000-shipping-container-home/

http://inthralld.com/2012/05/colorful-box-office-constructed-from-12-shipping-containers-in-rhode-island/

http://www.youtube.com/watch?v=Hou5_w60Lew

http://www.panoramio.com/photo/69636701

LOS ANGELES INDUSTRIAL REAL ESTATE SNAPSHOT ~ JANUARY 2013 ~ THE NEW YEAR IS GOING TO BE GOOD

December 30, 2012 on 2:01 pm | In Bravo, Charts + Statistics, Economy, Fascinating Information, Investment Opportunities, Market Snapshot, New Developments, Trends, Uncategorized | 3 Comments

by Jodi Summers

Happy New Year’s! 2013 is going to be a prosperous year for Los Angeles Industrial Real Estate. Our market is off the bottom and climbing. It will be happy year. If you want to buy or sell industrial properties in Los Angeles, now is the time – {Contact us @ (310) 392-1211 – we can facilitate your transaction.} There is very little inventory in the LAX-area market. Buyers are sifting through limited inventory – Increased demand, limited supply – both sale prices and lease rates are on the rise.

SoCal is known for being the deepest and largest industrial market in the nation, with LA and Orange counties having the lowest and second-lowest vacancy rates at 2.4% and 3.8%, respectively according to CBRE. (Btw, the Inland Empire ranks ninth-lowest at 6.3%.) Low vacancy rates mean inventories are sparse, declining 16.9% over the last year in the Los Angeles Metro Area.

Prices are way down too…the average asking price for industrial properties in the metro area is approximately $131.39 per square foot, down 2.9% from the previous year, calculates Loopnet. Asking prices for industrial properties reached a three-year high in February 2008 at $198.40 per square foot. The three-year low was $131.09 in May 2012. We are rising off the bottom…and prices are rising. The median sale price per square foot for industrial properties in the metro area climbed 5.7% in the second half of 2012.

Savvy owner-users are buying into the sometimes pricy Westside industrial market thanks to Small Business Administration loans. The SBA had its largest volume of financing ever in fiscal 2012. (FYI – SBA financing is available up to 200,000 square feet.) Watch for increased strength in the owner-user market in 2013.

Sale prices per square foot for industrial properties end the year at around $112.56, a 5.2% rise from a year ago, and 8.2% higher than the three-year-low set in January 2011. The highest recent median sale price was $127.91, set in October 2009.

There’s been no spec development for a couple of years – Sellers, if you’ve got an older industrial property, now is a good time to sell it to a new user. Hunky new properties will be coming on the market, now that speculative industrial development is ramping up.

“We’re tracking 16 million square feet of true spec development within our region,” calculates CBRE senior managing director Kurt Strasmann. “The Inland Empire accounts for almost 9 million square feet.”

On the leasing end, asking rents for industrial properties end the year @ around $8.81 per square foot, a rise of 0.8% on the year. Lease rates for industrial properties reached a three-year high in January 2008 at $10.85 per square foot. The lowest asking lease rate in the past three years was seen in January 2012 at $8.67. Time on the market is 150 days.

The National Association of Realtors offers a positive nationwide outlook. Their reports find that the areas with the lowest industrial vacancy rates currently are Orange County, CA, with a vacancy rate of 4.3%; Los Angeles – 4.4%; and Miami at 6.5%.

Throughout the Country, industrial vacancy rates should decline from 10.1% in 4Q 2012 to 9.5% in 4Q 2013. NAR reasons that annual industrial rents rose 1.7% in 2012 and will climb 2.2% next year. Net absorption of industrial space nationally will probably total 93.4 million square feet this year and 89.6 million in 2013.

As for the strength of our market, let’s conclude with the stats of CBRE senior managing director Kurt Strasmann. “The best indicator is that we’re tracking 16 million square feet of true spec development within our region, of which the Inland Empire accounts for almost 9 million square feet.”

We’re here to help you with your commercial and investment property needs. Please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

http://www.loopnet.com/Los-Angeles_California_Market-Trends

http://www.bisnow.com/

http://www.socalindustrialrealestateblog.com/?p=1590

http://www.realtor.org/news-releases/2012/10/commercial-real-estate-vacancies-slowly-declining-rents-rising

http://www.scribd.com/fullscreen/116742486?access_key=key-1on4f9dkq5d9bz8mcjb9

http://2013-wallpapers.blogspot.com/2012/07/happy-new-year-wallpapers-2013.html

http://dc.streetsblog.org/wp-content/uploads/2011/07/Cognition-Blog-New-York-Construction-Workers.jpg

http://new.usgbc.org/sites/default/files/imagecache/fixed_670-308/construction.jpg

http://www.industrialrealestate.net/images/34.jpg

RECESSIONS AND RECOVERIES ~ A BRIEF HISTORY

December 20, 2012 on 11:09 am | In Charts + Statistics, Fascinating Information, Market Snapshot, Trends, Uncategorized | 3 Comments

by Jodi Summers

We may be in recovery mode, but U.S. employment still has a long way to go before returning to its prerecession level.

This chart, courtesy of the New York Times, shows economy-wide job changes in this last recession and recovery compared with other recent recessions. Since the Great Recession began in December 2007, the economy has seen a net decline of about 3% in its nonfarm payroll jobs.

As an aside to these statics, take note that the working-age population has continued to grow. If the economy were healthy we would have more jobs today than we had before the recession.

Getting the economy back to the pre-recession level of 5% unemployment in two years would require job growth of closer to 280,000 per month.

There are now 12.3 million workers looking for work who cannot find it. The tally of those who are “underemployed” — that is, adding in those workers who are part time but want to be employed full time, and workers who want to work but are not looking — is an even larger 23 million.

The NY Times notes, “As bad as all these figures are, it’s worth remembering that job markets in the decade following a financial crisis are always terrible.”

Believe it or not, layoffs were far worse and lasted much longer in the aftermath of the financial crises that Finland and Sweden in 1991 and Spain in 1977, not to mention the recovery from our own Great Depression.

http://economix.blogs.nytimes.com/2012/11/02/comparing-recessions-and-recoveries/

http://www.socalofficerealestateblog.com/?p=2292

http://lawandmore.typepad.com/.a/6a00d8341c5d2553ef017616525e48970c-500wi

http://www.socalindustrialrealestateblog.com/?p=1535

http://www.profi-forex.us/system/news/J9-1.jpg

http://mediashower.com/img/61/flying%20IT%20worker.jpg

THE SOCAL INDUSTRIAL REAL ESTATE SNAPSHOT – DECEMBER 2012 – EXPANSION!!

November 30, 2012 on 8:35 pm | In Fascinating Information, Market Snapshot, Trends, Uncategorized | 2 Comments

by Jodi Summers

Typically, real estate slows down prior to a presidential election as people wait to see who gets into office and what direction the country will take. Certainly, we’ve seen that locally in the Los Angeles industrial real estate market….and it’s been true nationwide; demand for U.S. warehouse space has been sputtering along in the second half of the year. Companies are making fewer leasing decisions in the face of the lackluster job growth in manufacturing, exports and other sectors impacting industrial real estate. Election’s past, now the phone has started to ring. There is a growing awareness of LAX airport area industrial properties. Clients are interested…Developers, are seeing a bigger, brighter picture. Builders are betting that the near future will bring a heightened demand for big-box warehouse space. You know the economy is coming back when investors are willing to speculate on new construction.

Whoa! Hold your horses partner…the industrial market is still less than fabulous. According to CoStar’s Third Quarter Industrial Review and Outlook – only 17.4 million square feet of positive net absorption of warehouse space in the third quarter, a drop from the second quarter’s 25 million square feet — and down from 36 million square feet at the same time a year ago.

Absorption has slowed in markets across the country in the latter part of 2012 – even in the Inland Empire. During the first half of the year, the Inland Empire has captured nearly 40% of all U.S. industrial absorption. Strong demand had pushed vacancy rates into the 7% range in San Bernardino and Riverside counties. Taking note, developers saw the clues indicating rental growth and initiated speculative development. In 3Q the Inland Empire led the nation with 3.1 million square feet of industrial completions and 5.4 million square feet under construction. Keep in mind the Inland Empire is unique in that the bulk of big box industrial construction projects are built on speculation.

Nationally, 2012 will see approximately 47.1 million square feet of total warehouse projects under way in 86 markets – up 3% over last year, much of that speculative construction.

Experts note that the recovery to date has been strongest among larger, newer buildings. Demand for boxes of 100,000 square feet or larger built since 1990 has risen by more than 300 million square feet since the recession, while smaller buildings have experienced a demand decline of 300-350 million square feet. While overall absorption has been less than robust, “we can stop talking about recovery and start calling this an expansionary period because total absorption has reached pre-recession levels,” observes Rene Circ, director of industrial research for CoStar’s Property and Portfolio Research (PPR). “Developers have been on the sidelines for an uncomfortably long time and are ready to come back, with construction capital finally starting to become available.”

The heightened availability rate has made it very difficult for landlords to raise rents, even though vacancy continues to drift down. The few metros that have benefited from the early stirring of rent growth are also among the most supply constrained. Investors have taken notice, with trades in the sub-5% vicinity in such as Miami and Los Angeles.

With a baseline forecast that includes no recession and continued slow growth over the next year, CoStar expects demand to outpace supply through 2014 in the 210 largest markets.