Rare East L.A. Project Site Hits Market

Rare East L.A. Project Site Hits Market

LOS ANGELES-MJW Investments has placed its 23-acre, 1.8-million-sf former Sears Distribution Center in Boyle Heights on the market, offering a rare opportunity for developers to acquire a site of such size so close to Downtown. City officials have designated the site of the Downtown L.A. landmark for up to $450 million in redevelopment.  The East Los Angeles site of the 1920s-era Sears distribution center, visible to thousands of drivers passing by on freeways daily, has been designated for development that could include condominiums, apartments and 660,000 sf of stores, offices and restaurant space. The site is mostly vacant except for a Sears retail store and auto center. Mark Weinstein, president and CEO of MJW Investments, says his company has invested $50 million in the project and has created “a blueprint that will facilitate a smooth transition” for whoever buys the property. He adds, “We’ll stay involved to ensure the project’s success.” Several firms have approached Weinstein about buying the property, which was developed by Sears in 1927. A master plan was created for the location after some 40 meetings with community members and city officials. Weinstein is soliciting requests for qualifications from buyers interested in the site, with Richard Rizika and a team at CB Richard Ellis in Torrance handling the sale for MJW. Weinstein’s firm is now focusing on projects that can be completed in one to three years and is expanding outside California to focus on the repositioning of more residential and retail sites, he says. The renovated complex will continue to house a Sears retail store with upper floors turned into condominiums and commercial space. The new owners would be expected to carry out the city’s and the community’s plan to offer “a pedestrian-friendly environment featuring housing, dining, shopping and entertainment,” according to MJW. Reported By Bob Howard of GlobeSt.com

COMMERCIAL REAL ESTATE REACHING NEW HEIGHTS

COMMERCIAL REAL ESTATE REACHING NEW HEIGHTS

 
The healthy economy is creating a strong demand for commercial and  industrial space, and institutional investors are returning to the market, according to the latest commercial market update and forecast from the National Association of Realtors (NAR).
 
David Lereah, NAR’s chief economist, has declared that the market fundamentals are improving.
 
“Commercial real estate vacancy rates are falling and rents are rising as the economy expands and jobs are created,” he said. “Growth in the Gross Domestic Product is fairly strong and consumer spending remains healthy. Business spending is on the rebound, and the completion of new commercial buildings has shown positive growth over the last two years.”
 
Capital continues to flow into commercial real estate at strong levels, and delinquencies are minimal. According to the Mortgage Bankers Association, commercial mortgage originations totaled $201.7 billion in 2005, which is a 48.2 percent increase over 2004. Much of the funds, 35.8 percent, flowed into the multi-family sector; office real estate, 24.1 percent; retail, 16.5 percent; industrial, 7.4 percent; and hotel, 6.4 percent, followed.
 
Government spending also is strengthening the commercial sector, increasing more than 2 percent in the first quarter of 2006. Strong corporate profits are leading to business expansion, wages are growing and 2 million jobs were created in 2005. Imports and exports remain at high levels, fueling port business and industrial activity.
 
After bottoming-out in the first quarter of 2002, the rate of return on commercial property is now greater than 5 percent for all types of investment properties — apartment, industrial, office and retail, according to research from Haver Analytics and the National Council of Real Estate Investment Fiduciaries. Developing areas that will see the biggest commercial growth are the areas where people are buying second homes.
 
“Migration favors warm weather and low taxes, so states with the biggest net migration are seeing commercial growth,” Lereah notes.
 
Think Florida, Arizona, Nevada, Georgia and North Carolina.
 
Here are the NAR’s projections for five major commercial sectors — office, industrial, retail, multi-family and hospitality markets, according to Torto Wheaton Research and Real Capital Analytics.
 

INDUSTRIAL MARKET

Trade and distribution are driving the industrial market, with greater demand in the West and Southeast. Institutional investing in industrial property was up 65 percent in 2005 to $34.5 billion. There is strong build-to-suit activity, and urban industrial properties are being  redeveloped for mixed-use and residential purposes.
 
Net absorption of industrial space in 54 markets tracked is expected to be 265 million to 270 million square feet in 2006.
 
Industrial vacancy rates are projected to drop to close to 9 percent in 2006; down from 11.7 percent two years ago. Industrial rents should grow an average of 3.8 percent.
 

OFFICE MARKET

Office vacancy rates are the lowest since 2001, with rents growing in almost every major market. Investment volume in office real estate grew by 34 percent in 2005 to $99.7 billion. Institutional investors have returned to office acquisition. Projections show 350,000 office jobs will be created in 2006.
 
Net absorption of office space in 56 markets tracked projected that in 2006, 90 to 95 million square feet will be absorbed. Vacancy rates will average in the 12 percent range, and overall office rents are expected to rise 5 percent this year.
 

RETAIL MARKET

In 2005 Los Angeles topped the list of attractive retail markets for investors. Retail is the most inconsistent commercial market. There is an abundance of retail space in Indianapolis, Cincinnati and St. Louis, but drastic shortages in San Francisco and Las Vegas.
 
Net absorption of retail space is seen at 30 to 32 million square feet this year. Retail rents in 54 tracked markets are forecast to increase to an average of 4 percent in 2006.
 

MULTI-FAMILY MARKET

The apartment rental market has benefited from rising mortgage interest rates, as well as people wanting to get out at the top of the market. Job growth and migration are driving demand, primarily in the West and
Southeast. Conversion of apartments into condos is waning.
 
Multi-family net absorption in the 59 tracked metro areas is expected to be about 285,000-290,000 units in 2006.Vacancy rates are expected to be 5 percent, and rent growth is seen at 5.3 percent for 2006.
 

HOSPITALITY MARKET

Hotel occupancies are projected to average 68.7 percent for 2006, the highest since Sept. 11, 2001.Markets such as Honolulu and New York City have occupancies greater than 80 percent. Revenue per available room should be $76 this year — an increase of 6.3 percent from 2005.
 
The greatest growth markets are expected in Atlanta and Houston.
 
For more on Southern California commercial properties there is a great information blog at www.socalindustrialrealestateblog.com.
 
(Jodi Summers is director of the investment division at Boardwalk Realty. For your real estate needs, e-mail Jodi Summers at jodis@boardwalkrealty. com, or call (310) 309-4219, or visit her
Web site at www.santamonicalandmarks.com.)

Three Industrial, Office Deals Top $14M

Three Industrial, Office Deals Top $14M

POMONA, CA-Buyers have paid more than $14 million for three industrial and office properties in recently closed transactions, the largest of them the $6.8 million sale of a 78,000-sf industrial park here. The others are in Los Angeles and Valencia.  In the Pomona transaction, Belvedere Plumbing Co. acquired Pomona Business Park, a six-building, multitenant industrial park totaling 77,922 sf on 4.33 acres. The property is at 310-380 East End Ave. and 1605-1649 East Mission Blvd. The asset represents a stabilized investment for a long-standing entrepreneur who has operated his business in Pomona for many years, comments Alan Pekarcik of the Irvine office of Voit Commercial Brokerage. Pekarcik and Daniel Vittone of Voit represented the buyer and the seller, Pomona San Bernardino Co. The business park was 97% leased at the time of the sale, with 44 tenants. The suites range from 1,070 sf to 4,806 sf. The park was built in 1979 and renovated in 1999. In the Los Angeles deal, Ridgestone Corp. bought a 15,694-sf office property at 5400 Beethoven St. from Beethoven Partners for $4.2 million. The property is a two-story, single-tenant building on approximately 30,000 sf of land. Robert Appell and Brad Vickery of GVA Daum represented the seller. The buyer plans to reconfigure the property into a multitenant office building. Doug Marshall of the Klabin Co. represented Ridgestone. In the Valencia transaction, RFB, LLC and K4 Anza Property LLC bought a 23,146-sf industrial R&D facility on 44,100 square feet of land at 24907 Anza Drive for $3.1 million. Michael Corbin and Kevin Tamura of GVA Daum represented the seller, Salamone Family Trust, with the buyer represented by Westcord Commercial Real Estate Services. By Bob Howard of GlobeSt.com

Global Commercial + Industrial Property Market Strong

FOREIGN INVESTMENT
Global Commercial + Industrial Property Market Strong Investment in commercial and industrial real estate worldwide is rising at its fastest pace in 18 months, shaking off the pressures of high oil prices and investment competition from strengthening stock markets, according to the 2006 Global Investment Survey from the Royal Institution of Chartered Surveyors (RICS). Of note from the just released survey, the UK property market, although performing well, no longer leads the pack. Investor and business demand is picking up in other European centers, notably in Germany and Italy. The emerging markets of Asia and Europe led in business demand for commercial space in the second half of 2005. In India and China demand is driven by rapid economic expansion, while economic growth following EU membership has created high demand for office space in Eastern and Central Europe. Low interest rates have been the primary driver for growth, though the RICS chief economist predicts that by the end of 2006 interest rates will begin to rise across the eurozone, USA and Japan for the first time since the late 1980s. With global bond yields already on the rise in these three economic blocs, the property market will feel the impact as foreign investor interest cools. Read a report summary.

Greenlaw, Guggenheim Acquire $15M Industrial Asset

Greenlaw, Guggenheim Acquire $15M Industrial Asset

Greenlaw Partners of Newport Beach and Guggenheim Real Estate have taken title to a 182,566-sf industrial property at 9601-9603 John St. in Santa Fe Springs, CA that is fully leased to a single tenant. The $15.3-million acquisition marks the 12th deal that the joint venture of Greenlaw and Guggenheim has closed since the two firms formed the joint venture.

Rob Socci, SVP in the Anaheim Metro office of Voit Commercial Brokerage, says that the investors were looking for “a property with a reputable tenant in a very solid industrial market,” and the John Street building filled the bill. Socci represented the buyers of the asset, which is leased to Quixote Corp. The seller, a private investor, was represented by Chris Migliori of GVA Daum.

Other assets acquired by Greenlaw Partners and Guggenheim include a 129,600-sf industrial property in Anaheim that they bought this year for $11.1 million. The property is at 605-611 E. Cerritos Ave.

By Bob Howard of GlobeSt.com