Southern California Industrial Real Estate Blog

3Q Drop-Off in Industrial Absorption Rates, but SoCal still strong

3Q Drop-Off in Industrial Absorption Rates, but SoCal still strong

Experts Say that Wild Fires Won’t Affect the California Economy

 Experts Predict that Wild Fires Won’t Affect the California Economy

Though the 16 fires that are engulfing San Bernardino, Riverside, Los Angeles and San Diego counties will produce devastating short-term effects for many home and business owners, the economy will apparently be granted a reprieve.

 Some of the 881,500 Southern California evacuated residents found that their homes are among the 1,155 (as of Wednesday October 25, 2007) were destroyed. But, as bleak of a situation as this seems, however, economists believe that once the immediate devastation passes very little long-term effects will be felt. “We’re obviously in the midst of a housing recession: prices are falling and the building industry is getting hammered,” Christopher Thornberg, a Los Angeles economist and principal at Beacon Economics, tells GlobeSt.com. “But with the fires, the impact here is probably somewhat positive. We have a situation where there will be rebuilding, which will provide a little boost to an industry in tough shape.”

According to California’s Employment Development Department, the construction industry has lost 28,600 jobs since September, which is a 3% decline from 2006.

However, with the current wildfires primed to become one of the most expensive fires in the nation’s history, and State Farm currently having received 1,351 claims and 251 reports of homes being destroyed, the construction industry should experience a pick up in business.

As for businesses, current estimates state that about 500 businesses have been destroyed by the fires while many others have been evacuated. Large San Diego tenants such as Jack in the Box, Qualcomm, Sony and Hewlett-Packard had to partially or completely halt their operations early this week as fire officials were unable to extinguish and contain the various fires due to dry weather and high winds. These closures, as well as the closures of many retailers, post offices and tourist attractions such as SeaWorld and the Wild Animal Park, are again set to have only short-term effects on business and tourism.

“Large events create a certain degree of disruption,” Thornberg says. “Next quarter we’ll see a big bounce in the economy. The economy will be stimulated and businesses will be catching up. The business [disrupted] is business to be delayed–not business to be canceled. Mail will go out next month. Deals will close next month. All businesses have built in a certain degree of slack… . As for tourism, it’s Southern California, it’s San Diego. It will be fine.”

Thornberg also notes that although many disasters of this kind can’t be avoided, there are measures that can be put in place to prevent widespread damage to businesses and homeowners in the future

“Unfortunately, people are given incentive to not worry about risk because the government happily steps in and bails them out,” he says. “People say, ‘this is a great place to live and I don’t have to deal with the consequences of a fire.’ But we should be aware of the fact that when you build in canyons and wilderness areas, yes it provides a great lifestyle but it puts you at risk. We as a society condone this risk at the taxpayers’ expense. How many times are you going to rebuild a business or a gated, high-end neighborhood in the middle of the San Diego wilderness before we say ‘you should know better’?”

By Nellie Day 

http://www.globest.com/news/1021_1021/sandiego/165416-1.html?type=pf

Industrial Buildings Requested to Cut Energy by 30%

Industrial Buildings Requested to Cut Energy by 30%

Residents in Southern California are being asked to cut down their water usage by 20%…immediately.
Now BOMA International, the building owners and managers association, is pushing an initiative for industrial buildings to trim energy consumption 30 percent by 2012.

BOMA officials say going the green route makes moral sense, and will lead to greater cost savings for building owners and managers in the long run. BOMA has also issued a “Seven-Point Challenge,” urging builders and architects to take more of a leading role in the overall green-building movement.

Find out more about BOMA energy efficient plans @ http://www.boma.org/TrainingAndEducation/BEEP/

And here are some entertaining facts for you:

FACT: The commercial real estate industry spends approximately $24 billion annually on energy and contributes 18% of US carbon dioxide emissions.
FACT: Energy represents the single largest controllable operating expense for industrial buildings, typically a third of variable expenses.
FACT: If only 2,000 buildings adopt BEEP’s no- and low-cost best practices over the next three years, energy consumption and carbon emissions will be reduced by 10% which will result in $400 million in energy savings and 6.6 billion pounds less carbon dioxide released in to the atmosphere.
 

203,000sf OF NEW INDUSTRIAL PROPERTY COMING TO HAWTHORNE

203,000sf OF NEW INDUSTRIAL PROPERTY COMING TO HAWTHORNE 

Kearny Real Estate Co. and Morgan Stanley Real Estate Fund V has started construction on a $45 million in Hawthorne. The 21-building industrial complex will total more than 203,000 sf. The complex is part of Kearny’s Century Business Center, a 2.3-millionsf office and industrial campus located at the former manufacturing facility for Vought Aircraft Industries.

Kearny acquired the 86-acre site in July 2005 and leased back nearly 1.4 million sf of space to Vought, which manufactures Boeing 747 fuselages and 767 aft body panels. The property is immediately adjacent to the Hawthorne Airport, which Kearny controls through a 45-year ground lease with the City of Hawthorne. The site has immediate access to Interstate 105 at Crenshaw Boulevard.

Ranging from 5,700 sf to 20,700 sf, the new industrial buildings are expected to be ready for occupancy by January 2008. Kearny razed approximately 350,000 sf of obsolete buildings and aircraft hangars in repositioning the property to make way for the new development.

While preparing the site for the new development, Kearny marketed the remaining 15 buildings to a variety of users in transactions exceeding $48 million.

Kearny has retained Jeff Kernochan of Fischer Corporate Real Estate Services to market the new project, which will feature fully sprinklered buildings, 24-foot clear heights, ground level (with larger buildings including dock high) loading, individual fenced yards, and office build-outs up to 2,000 sf. All 21 buildings will be located within a 24-hour security gated complex 

Info courtesy of Bob Howard, Globest.com http://www.cityfeet.com/News/NewsArticle.aspx?Id=26024 

INDUSTRIAL CONSTRUCTION PERMIT REQUESTS SLOWING IN SOUTHERN CALIFORNIA

INDUSTRIAL CONSTRUCTION PERMIT REQUESTS SLOWING IN SOUTHERN CALIFORNIA

In Los Angeles County through eight months, industrial and retail permit valuations  trailed by 34.3% and 11.3% FROM A comparable period of 2006. But, Office permit valuations were up 174.5%.  In Orange County, retail permit values through August were 86.6% ahead of last year, but industrial and office continued to lag, down by 30.1% and 47.1%, respectively.

     The August news was disappointing in Riverside County as well, where industrial was off by 48.6% and office was down by 16.5%.  However, retail was ahead by 15.6% of the eight-month 2006 period.  In San Bernardino County at eight months, office permit values were up by 62.3%, retail was ahead by 22.9%, but industrial permit values trailed by 19.7%.

     In San Diego County through August, industrial was down by 48.4%, retail was down by 33.4%, while office was 50.2% ahead of the eight-month 2006 period.  .  In Ventura County through eight months, office was down by 1.1%, retail was down by 18.8%, and industrial permit values lagged by 11.1%.

     In the 9-county Bay Area through eight months, permit values for all three sectors were mixed.  Industrial was down by 14.3%.  However, both Alameda County and Napa County posted strong performance, up by 568.1% and 178.2% respectively.  Office was ahead by 22.8%, with San Mateo County (+325.9%) and Contra Costa County (+298.5%) setting the pace.  Retail lagged by 13.2%, with strength in Napa (+208.4%), San Francisco (+233.3%) and Santa Clara (+36.2%) counties.  

http://laedc.org/economicinformation/e-edge.html#5