Jodi Summers = Industrial Real Estate

SOCAL INDUSTRIAL REAL ESTATE SNAPSHOT SEPTEMBER 2012 > BUMPY ROAD

August 31, 2012 on 8:52 pm | In Charts + Statistics, Economy, Market Snapshot, Trends, Uncategorized | 2 Comments

by Jodi Summers

Here’s a visual for the Los Angeles industrial real estate real estate market > it’s like a truck bouncing along a bumpy road > it’s up a little…it’s down a little… < Like that truck, L.A. industrial property values are bouncing along the bottom of the market.

Loopnet determines that the average asking price for industrial properties in the Los Angeles metro area was $131.24 per square foot for the month. This represents a decrease of 5.4% year-over-year as well as a decrease of 1.4% compared to the end of the fourth quarter of 2011. This month, asking prices for industrial properties have fallen to a new three-year low. The previous three-year low was last month at $131.67.

Prices are down, and so is square footage. As a matter of note, the square footage on industrial properties available for sale in the metro area has been falling for the past five months. Industrial properties in the metro area have seen a 1.8% drop in square footage for sale over the past year.

But it’s not just us here in Southern California, the slowdown is worldwide. At the ports, it’s been concluded that the slowdown in global demand has lead to less trade across the globe, including trans-pacific trade. The U.S. economy is limping along and demand from China has weakened. Global constriction has led to a contraction in trade flows at our local ports, particularly at the Port of Long Beach. The Port of Long Beach saw its fifth month of decline in July as both imports and exports dropped over the year for a 5.5% decline in cargo volume. This decline in cargo volume has been attributed to the loss of numerous niche service strings. Fortunately, the Port of Los Angeles experienced another strong month of activity in July, so that the total number of containers handled at the San Pedro Bay ports declined by only 1% on a year-over-year basis to 1,248,861 TEUs (twenty-foot equivalent units), after witnessing strength in June.

Similar to last year, U.S. retailers seem to be delaying holiday shopping season orders. The August and September trade numbers should be instrumental in determining the year-end results. Virtually everything is thumping along the bottom of the market. This scenario means industrial real estate buyers are looking…hard.

The Demand on LoopNet for industrial properties spiked in the Los Angeles Metro Area market, rising 24.4% since December 2011, two percentage points more than the 22.4% increase in the national average. Demand for industrial properties also increased by 14.9% over the past year. The yearly change ranks the Los Angeles Metro Area 40^th out of the top 48 metros.

The drop in both the supply of properties and the average time on market could be a sign that prices are going to move upwards. A decrease in supply also appears to be making the market more favorable for sellers, which could be why prices will soon be on the rise.

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.laedc.org/eedge/index.html#2

http://www.loopnet.com/Los-Angeles_California_Market-Trends?Trends=AskingPricesFS,SalePricesFS,TotalAvailableForSaleFS,NumberOfListingsFS,ProfileViewsFS,TotalNumOfUnitsFS,TotalSFAvailableFS,DaysOnMarketFS,AskingRentsFL,NumberOfListingsFL,ProfileViewsFL,TotalSFAvailableFL,DaysOnMarketFL&PropertyTypes=Industrial

http://www.socalindustrialrealestateblog.com/?p=1383

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E-COMMERCE IS LEADING THE INDUSTRIAL REAL ESTATE RECOVERY

July 20, 2012 on 12:50 am | In Bravo, Economy, New Developments, Trends, Uncategorized | 1 Comment

by Jodi Summers

Logistics and fulfillment continue to lead the current industrial revolution. E-Commerce companies are buying up big box distribution facilities larger than 500,000 square feet near major urban areas, which is why Inland Empire industrials have been thriving.(Finding ½ million square feet in Los Angeles County is challenging and extremely expensive.)

E-commerce superstars, such as Amazon.com, have spearheaded the demand. Recently, Amazon inked two deals to develop fulfillment centers in California. One massive complex is being built in the ultra-hot Inland Empire…San Bernardino to be exact. And, up north, a fulfillment center of approximately one-million-square-foot is being developed in Patterson (near Modesto).

Other big box buyers and lessees are dominated by consumer goods companies, distribution operations for major retailers, third-party logistics firms that support those industries and food and beverage businesses.

As you’ve been hearing, the Inland Empire exceeded all projections by capturing nearly 40% of all U.S. industrial absorption. That’s because the Ports of San Pedro and Long Beach make up the largest port complex in North America.

Other e-commerce firms have leased multiple facilities across multiple markets, taking advantage of double-digit growth and strength of e-tail online sales. Research by Jones Lang Lasalle notes that average vacancy rates in U.S. industrial markets have dipped below the 10% mark, and more than three quarters of the nation’s largest industrial real estate markets have recorded positive absorption.

Because of the renewed strength of the industrial market, we are seeing the return of speculative development. in the Inland Empire, as institutions are buying vacant warehouses, betting on future rent growth and leasing risk.

Expect to see continuing demand for quality big-box space in key logistics hubs, with the focus remaining on the Inland Empire, New Jersey (especially central), Chicago, and Dallas. Eexpect to see more activity in the emerging intermodal hubs, such as Kansas City and Memphis.

http://www.areadevelopment.com/EconomicsGovernmentPolicy/January2012/industrial-real-estate-2012-outlook-565522.shtml

http://www.globest.com/news/12_345/seattle/development/Two-Fulfillment-Centers-Under-Construction-For-Amazon-321231.html?ET=globest:e30477:277110a:&st=email

http://www.socalindustrialrealestateblog.com/?p=1273

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SOCAL INDUSTRIAL REAL ESTATE SNAPSHOT ~ JULY 2012 > SEXY OPPORTUNITY

June 30, 2012 on 6:58 pm | In Charts + Statistics, Economy, Investment Opportunities, Market Snapshot, Trends, Uncategorized | 2 Comments

by Jodi Summers

Compare non-residential commercial property investments in the Los Angeles area…survey says, sentiment is in favor of industrial development across the state.

“Industrial space looks to be the leader,” offered Jerry Nickelsburg, a senior economist at the UCLA Anderson School of Management, contend. “We’re seeing warehouses that were leased, but not fully utilized now fully utilized.”

There’s a flurry of activity in the marketplace around Los Angeles ….it’s palpable. Asking rates for industrial properties have gone up since the last quarter, rising 0.5% to $8.74 per square foot. Loopnet notes that asking lease rates for industrial properties reached a three-year high in January 2008 at $10.85 per square foot. In comparison, the median asking price is now 4.7% lower.

Higher rents, lower purchase price < sexy opportunity.

In the metro Los Angeles area, industrial sale prices are up by 2.3%. The highest median sale price during the past three years was $144.72, set in April 2009. In comparison, the current median sale price is down by 25.7%. However, the current price is 3.3% higher than the three-year-low of $104.06, which was set in January 2011.

With our population, ports, strengthening infrastructure and logistics expertise, industrial demand will stay strong in California for years to come. As you know, that’s already happening. In recent months, the Inland Empire has captured nearly 40% of all U.S. industrial absorption. Strong demand has pushed vacancy rates into the 7% range in San Bernardino and Riverside counties. And the area is seeing signs of rental growth and speculative development.

As you know, the Inland Empire was whonked upside its economy in the recession. If the Inland Empire can strike back, there’s hope for cities around the country. Los Angeles is one of the best business cities with the most to offer, just watch us come back from the precipice and thrive as one of the most significant industrial economies in the country.

http://www.globest.com/news/12_367/west/office/california-office-industrial-survey-322210.html?ET=globest:e30994:277110a:&st=email

http://www.loopnet.com/Los%20Angeles_CA_Market-Trends?Trends=AskingPricesFS,SalePricesFS,TotalAvailableForSaleFS,NumberOfListingsFS,TotalNumOfUnitsFS,TotalSFAvailableFS,AskingRentsFL,NumberOfListingsFL,TotalSFAvailableFL&PropertyTypes=Industrial

http://www.socalindustrialrealestateblog.com/index.php?s=snapshot

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http://www.socalindustrialrealestateblog.com/?p=1324

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BETTER BUILDING CHALLENGE BUILDS BETTER METAL

June 10, 2012 on 12:16 am | In Economy, Fascinating Information, Government, Green, New Developments, Problem Solving, Uncategorized | 2 Comments

Edited by Jodi Summers

Let’s start by saying “Better Building Challenge benefits” 3x fast…The goal of the Better Buildings Challenge is to make American buildings 20% more energy efficient by 2020. It is estimated that the energy to operate the buildings in which we work, shop, and go to school costs the U.S. about $200 billion annually, and on average, 30% of this energy is wasted. More efficient commercial buildings reduces the nation’s dependence on foreign oil, protects the environment, and saves billions of dollars in energy costs that can be spent growing businesses, investing in new technologies, and creating American jobs.

The Better Buildings Challenge asks corporate chief executive officers, university presidents, and state and local leaders to make a public commitment to energy efficiency. Through the Better Buildings Challenge, the U.S. Department of Energy (DOE) is highlighting leaders that have committed to upgrading buildings across their portfolio, and providing their energy savings data and strategies as models for others to follow.

Let us share with you the details of the program…

What kind of organizations can join?

The Better Buildings Challenge involves a network of Partners and Allies that demonstrate national leadership in energy efficiency:

* Partners are commercial businesses, industrial corporations, universities, and other building owners that make a public commitment to reduce energy consumption in their facilities

* Community Based Partners are municipalities and States that work with local businesses and universities to assess opportunities and take action

* Allies are financial institutions, service providers, technology firms, and program administrators that commit to supporting the energy efficiency marketplace.

What does an organization commit to?

The commitment is matched to the type of organization. For example, Partners commit to:

* Publically pledge an organization-wide energy savings goal over a 2 to 5 year period within 6 months of joining, and develop an organization-wide plan and schedule,

* Announce an initial showcase project and initiate the project,

* Share information about their progress against their pledge goal, and about the energy efficiency implementation models (including the tools, technologies, and processes) they used to reach their pledge goal.

What kind of technical assistance will DOE provide? What kind of recognition?

DOE, in collaboration with its federal partners such as the Environmental Protection Agency (EPA), the Department of Treasury, and the Small Business Administration (SBA), will:

* Provide technical assistance and energy efficiency implementation models to help Partners achieve their pledge,

* Establish a marketplace of energy efficiency stakeholders, such as government, industry, service providers, financial institutions, and technology companies, in order to transform the market and realize the full economic and environmental benefits of energy efficiency,

* Insure integrity in the reported results through quality assurance standards,

* Recognize Partners and Allies for their progress in achieving milestones and reaching goals.

DOE will also profile the innovative and cost effective energy efficiency implementation models of this leadership group for others to use.

What are the requirements regarding reporting and transparency?

Organizations are asked to report publicly on their energy savings across their organization and at the individual facility/building level on a quarterly basis. They are also asked to share information about the best practice implementation models that they used to achieve their pledge targets. These requirements will be refined in coordination with the initial program Partners and Allies.

What data will be required to demonstrate energy savings?

Baseline energy intensity data will be required at the portfolio and individual facility level to demonstrate energy savings. These requirements will be refined in coordination with the initial program Partners and Allies.

What does the government offer Better Buildings Challenge Partners?

DOE, in collaboration with its federal partners, will offer energy efficiency technical assistance and best practice implementation models to the Challenge Partners to encourage investment in energy efficiency. Technical and informational resources under development include:

* Tools that support use of tax and utility credits

* Assessment tools for evaluating energy efficiency measures

* Financial modeling tools

* Model high-efficiency technology specifications

* A process for identifying qualified service companies

* Financing opportunities through the Small Business Administration

In addition, the Better Buildings Challenge will connect Partners that commit to and demonstrate sound implementation approaches for investing in the cost-effective energy efficiency opportunities in their facilities with Financial, Technology, and Service Allies that commit to provide best practice services for deep energy savings and to transparency in results.

What are the commitments for financial allies?

* Assign a senior-level liaison who is committed to allocating the necessary resources to pursue all potential projects resulting from the Better Buildings Challenge

* Invest in or lend at least $50 million in commercial building energy efficiency projects or collaborate with industry leaders and stakeholder to create at least a $50 million market for each financial product

* Provide information on financial performance and structure information

What type of financial performance and structure information are Financial Allies asked to share?

Financial Allies are asked to share information about their products and services, such as loan packages, values, interest rates, and cash flow information allowing for Discounted Cash Flow and Net Present Value analyses.

How does the Better Buildings Challenge fit into the larger Better Buildings Program?

The Better Buildings Challenge is part of a larger Better Buildings Program, an effort to make American commercial, residential, and industrial buildings more energy efficient through innovative action and real world solutions.

For example, the Better Buildings Challenge will complement the efforts of the Better Buildings Neighborhood program—a three year, $500 million grant program managed by DOE, which is primarily focused on residential buildings at the state and local level.

Through Better Buildings, DOE is also working to increase and accelerate better financing opportunities for building upgrades, better workforce training in energy audits and building operation, and better tax incentives to encourage more energy efficiency upgrades.

http://www4.eere.energy.gov/challenge/faq

http://www.greentechmedia.com/articles/read/the-white-houses-4b-better-buildings-challenge/

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GREEN METAL . THE BETTER BUILDINGS CHALLENGE > WITHOUT CONGRESS’ MEDDLE

April 10, 2012 on 12:04 am | In Bravo, Economy, Government, Green, New Developments, Problem Solving, Uncategorized | No Comments

By Jodi Summers

The brilliant part of The U.S. Department of Energy’s Better Buildings Challenge, is that it was been achieved through strategic partnership and does not require the approval of the Republican Congress.

The Better Buildings Challenge was announced by President Barack Obama and former President Bill Clinton in December “Upgrading the energy efficiency of America’s buildings is one of the fastest, easiest, and cheapest ways to save money, cut down on harmful pollution, and create good jobs right now,” observed President Obama. “But we can’t wait for Congress to act. I’m directing all federal agencies to make at least $2 billion worth of energy efficiency upgrades over the next 2 years – at no up-front cost to the taxpayer. Coupled with today’s extraordinary private sector commitments of $2 billion to upgrade businesses, factories, and military housing, America is taking another big step towards the competitive, clean energy economy it will take to win the future.”

FYI…The energy to operate commercial buildings costs about $200 billion every year. And on average, 30% of this energy is wasted. The goal of the Better Buildings Challenge is to engage building operators nationwide in improving energy efficiency by 20% by 2020.

The White House says that more than 60 organizations have secured:

1.6 Billion Square Feet Committed

$2 Billion in Financing through Allies

+300 Manufacturing Facilities

The $4 billion challenge is the latest move the Obama administration has made as part of its “We Can’t Wait” campaign to bypass a deadlocked Congress and spur job creation, even as the President pushes lawmakers to pass a $447 billion jobs bill.

We’re proud to say that Los Angeles is one of an elite group of communities, companies, universities and organizations working to improve their bottom line by saving energy.

Mayor Antonio Villaraigosa and the City of Los Angeles have launched the Los Angeles Commercial Building Performance Partnership to support development and financing of comprehensive energy efficiency and water efficiency upgrades in commercial buildings.

Los Angeles expects approximately 30 million square feet of commercial property to be audited, using $3.2 million in Recovery Act funds with the goal of driving at least $25 million in total investment during their partnership in the Better Buildings Challenge.

The initiative is part of the California Energy Commission’s Energy Upgrade California program, a statewide effort to roll out a network of utility-incentive packages, pilot innovative financing approaches.

Since June 2011 LA County has imitated energy audits for more than 25 million square feet of commercial space — from small neighborhood retailers to downtown skyscrapers. Additionally we are developing a directory of capital providers to facilitate access to project funding options.

“Investments in building retrofits and energy efficiency can make a real difference in the American economy, by creating jobs, growing our industries, improving businesses’ bottom lines, reducing our energy bills and consumption, and preserving our planet for future generations,” concludes President Clinton. “I am proud so many members of the Clinton Global Initiative have joined this Challenge. Working together, I am pleased the commitments to the BBC have grown from the initial $500 million and 300 million square feet that we announced in June at CGI America, to the $2 billion investment with over 1 billion square feet of retrofitted space.”

http://www4.eere.energy.gov/challenge/partners/better-buildings/los-angeles

http://www.thestreet.com/story/11329795/1/supervalu174-announces-partnership-with-the-8220better-buildings-challenge8221-at-white-house-event-with-president.html

http://www4.eere.energy.gov/challenge/

http://www1.eere.energy.gov/buildings/news_detail.html?news_id=17889

http://www.whitehouse.gov/the-press-office/2011/12/02/we-cant-wait-president-obama-announces-nearly-4-billion-investment-energ

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SOCAL INDUSTRIAL REAL ESTATE SNAPSHOT – APRIL 2012 > THEY SAY WE’VE GOT IT GOOD

March 30, 2012 on 7:38 pm | In Charts + Statistics, Economy, Market Snapshot, Trends, Uncategorized | 2 Comments

by Jodi Summers

Demand from logistics companies should always keep Los Angeles industrial real estate strong. The ports of Los Angeles and Long Beach make up the third-largest port complex in the world, and SoCal is a significant distribution center. Between port and airport warehousing, as well as the Alameda Corridor intermodal freight-rail expressway connecting the ports to the transcontinental railroads just east of L.A.’s downtown, logistics is outpacing aerospace and other manufacturing as one of the leading occupiers of industrial property.

So many good things are being said, and yet industrial asking prices are scuttling along the bottom. If you look at Metro Los Angeles asking prices, they are currently @ a very affordable $131.67, down -0.9% from three months prior, and down -5.7% from the same time last year. County prices averaged $131.31 down -4.7% from the year previous. According to Loopnet.com, asking prices for industrial properties have fallen to a new three-year low.

And here’s why now’s the time. If you look @ Industrial Property Sale Prices for Metro L.A., the median sale price per square foot has fallen 0.2% in the past two months. Compared to last quarter, industrial properties have seen a 0.1% decline, to $108.50, for its average sale price per square foot…this is an immediate current value as sale prices have seen a 3.7% increase for the previous 12 months. The highest median sale price over the past three years was $147.50, which was set in March 2009. In comparison, the current median sale price is down by 26.4% – 4.3% above the lowest price of the past three years, which was set in January 2011.

Los Angeles County is ranked as the number-one manufacturing center in the United States, according to a recent report from the Los Angeles County Economic Development Corporation Kyser Center for Economic Research. Our region now boasts almost 930 million square feet of rentable industrial building area. If our prices are low, can you imagine how the rest of the country is doing?

Rents in Metro L.A. are currently showing an average asking lease rate was $8.68 per square foot annually. This shows a drop of 1.1% year-over-year and a decline of 0.2% from the end of the fourth quarter of 2011. Lease rates for industrial properties hit a three-year peak in January 2008 at $10.85 per square foot. The current median asking lease rate is 5.3% lower.