Southern California Industrial Real Estate Blog

THINK GREEN - REAL ESTATE IS STRONGER NEAR METROPOLITAN AREAS

August 27, 2009 on 12:05 am | In CHARTS + STATISTICS, FASCINATING INFORMATION, GREEN, Investment Opportunities, New Developments, Problem Solving, Trends, Uncategorized, all, statistics | 5 Comments

By Jodi Summers

The statistics are in – properties closer to cities with thriving economies and mass transit will outperform outer-ring suburbs and “exurban areas,” where high gas prices are making long car commutes prohibitively expensive and rising energy costs mean higher utility bills. We’re thinking and spending green.

This information comes courtesy of a report released by the Urban Land Institute and PricewaterhouseCoopers LLP. The study interviewed more than 600 real estate experts, including investors, developers, lenders and real estate brokers.

The report, Emerging Trends in Real Estate 2009, projects that the worst of the national housing downturn may be over, with the bottom of the market being confirmed by the end of this year.

The report is focused on commercial real estate such as commercial, office, industrial and apartment properties, but includes an overview of housing markets and how they may be affected by macroeconomic trends and changing regional conditions. Some interesting observations:

· Seattle, San Francisco, Washington, D.C., New York and Los Angeles are expected to be the top five markets for investment in commercial property in 2009.

· Wall Street layoffs and office vacancies will help Seattle and San Francisco to reclaim top rankings for commercial investment from New York.

· The thriving energy industry is expected to boost commercial investment prospects for “long-forlorn” Texas markets, but Midwest factory towns are expected to lose even more ground,

· “24 hour cities” like New York, Boston, Chicago, San Francisco, and Washington, D.C., should also benefit from mass transit systems that can free residents from car dependence.

But, gains in the attractiveness of 24-hour cities could be “squandered” if cutbacks in police, fire and sanitation result in less safe and appealing environments. Falling property values and the economic slowdown are expected to cut into tax revenues, forcing cities to reduce services.

“Nothing would undermine 24-hour dynamics more quickly than rising crime rates,” the report warned.

· “24 hour cities” like New York, Boston, Chicago, San Francisco, and Washington, D.C., should also benefit from mass transit systems that can free residents from car dependence.

But, gains in the attractiveness of 24-hour cities could be “squandered” if cutbacks in police, fire and sanitation result in less safe and appealing environments. Falling property values and the economic slowdown are expected to cut into tax revenues, forcing cities to reduce services.

“Nothing would undermine 24-hour dynamics more quickly than rising crime rates,” the report warned.

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INDUSTRIAL PROPERTY SUPPLY IS UP, DEMAND IS WAY DOWN

August 20, 2009 on 5:52 pm | In CHARTS + STATISTICS, FASCINATING INDUSTRIAL REAL ESTATE INFORMATION, Investment Opportunities, Uncategorized, all, statistics | 4 Comments

by Jodi Summers

Would you like to see some fascinating statistics? Check out this two-year market snapshot showing the evolution of Supply vs. Demand chart for Industrial Properties in Los Angeles county.

Industrial sales are at a 10 year low. Is this due to the lack of capital in the commercial marketplace? The decline of purchasing power? Both? Neither?

Has your real estate market stablilized? Email jodi@jodisummers.com to receive a free market report for your LA county neighborhood.

GREEN OFFICE AND INDUSTRIAL REITS SHOWING PROMISE

August 13, 2009 on 12:48 am | In Bravo, FASCINATING INDUSTRIAL REAL ESTATE INFORMATION, GREEN, Investment Opportunities, Trends, Uncategorized, all | 5 Comments

GREEN OFFICE AND INDUSTRIAL REITS SHOWING PROMISE

By Jodi Summers

Office and industrial REITs expect to remain tightly focused for the balance of the year –evaluating the damage to occupancy and rents twisted by current economic conditions.Expect REITs to be greening and negotiating sexier leases mitigate potential damage.

Buildings are responsible for 40% of emissions, and commercial sectors such as industrial and office are greening to cut costs and attract hipper clients.

Taking such savvy acts, coupled with the 2^nd + 3^rd quarter strengthening of the economy have motivated market observers to observe that the publicly traded REIT market at bottom or near bottom.

A recent CBRE Investors report noted that “the bottom of the capital market cycle may be close,” with pricing metrics on U.S. commercial real estate starting to look attractive again to buyers.

“Much of the recent negative press about commercial real estate reflects the experiences of distressed owners,” CBRE noted in their report. “However, from

prospective buyers’ perspectives, many pricing indicators look historically favorable,” based on the current widening spread between aappraised-value cap rates and risk-free 10-year U.S. Treasury bonds.

“Just as REITs led the private markets in 2007 and 2008, it is probable that the recent share-price recovery is an early indicator that a trough in private markets is coming soon.”

Energy saving upgrades such as timed lighting + cooling, white roofs and thin solar films to cover the windows of office buildings are cutting back on cooling costs and increasing user comfort.

CoStar’s office and industrial market report stated that average sale prices, while down significantly from their 2007 peaks, are at or close to their historical averages. Cap rates have expanded sharply during the same period but are also in line with historic averages.

REITs comprise just 10% of the commercial real estate market, but wield significance as a bellwether for future commercial real estate conditions.

**

http://www.costar.com/News/Article.aspx?id=6A1CBF26B572D3A957377280529227C0&ref=100&iid=143&cid=383F14EEE265B182474DA2442BACBBBF

http://www.socalofficerealestateblog.com/?p=405

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WE WIN! LOS ANGELES IS THE MOST OVERPRICED CITY IN THE UNITED STATES

August 6, 2009 on 12:06 am | In CHARTS + STATISTICS, FASCINATING INFORMATION, Problems, Trends, Uncategorized, all, statistics | 2 Comments

WE WIN! LOS ANGELES IS THE MOST OVERPRICED CITY IN THE UNITED STATES

By Jodi Summers

Los Angeles likes being on top…though we’d rather be famous than infamous. But today, we’re infamous, as Forbes sites L.A. as the most overpriced housing market in the U.S. Forbes then ranked these metros using four measures: average salary for workers with a bachelor’s degree or higher, with data from PayScale.com; annual unemployment statistics from the Bureau of Labor Statistics; cost of living, according to Moody’s Economy.com; and the Housing Opportunity Index from the National Association of Homebuilders and Wells Fargo, which measures the number of homes sold in a given area that would be affordable to a family earning the local median income, based on standard mortgage underwriting criteria.

Here’s the top 20 list so you can chuckle and guffaw….

No. 1: Los Angeles, Calif.

(Los Angeles-Long Beach-Glendale, Calif.)

Cost of Living: 47 of 50

Housing Opportunity: 47 of 50

Unemployment Rate: 47 of 50

Average Salary: 15 of 50

~~

No. 2: Chicago, Ill.

(Chicago-Naperville-Joliet, Ill.)

Cost of Living: 44 of 50

Housing Opportunity: 36 of 50

Unemployment Rate: 43 of 50

Average Salary: 23 of 50

~~

No. 3: Miami, Fla.

(Miami-Miami Beach-Kendall, Fla.)

Cost of Living: 26 of 50

Housing Opportunity: 46 of 50

Unemployment Rate: 39 of 50

Average Salary: 31 of 50

~~

No. 4: New York

(New York-White Plains-Wayne, N.Y./N.J.)

Cost of Living: 47 of 50

Housing Opportunity: 50 of 50

Unemployment Rate: 37 of 50

Average Salary: 6 of 50

~~

No. 5: Providence, R.I.

(Providence-New Bedford-Fall River, R.I.)

Cost of Living: 26 of 50

Housing Opportunity: 28 of 50

Unemployment Rate: 48 of 50

Average Salary: 37 of 50

~~

No. 6: Riverside, Calif.

(Riverside-San Bernardino-Ontario, Calif.)

Cost of Living: 23 of 50

Housing Opportunity: 34 of 50

Unemployment Rate: 49 of 50

Average Salary: 26 of 50

~~

No. 7: Long Island, N.Y.

(Nassau-Suffolk, N.Y.)

Cost of Living: 40 of 50

Housing Opportunity: 48 of 50

Unemployment Rate: 17 of 50

Average Salary: 24 of 50

~~

No. 8: Cleveland, Ohio

(Cleveland-Elyria-Mentor, Ohio)

Cost of Living: 32 of 50

Housing Opportunity: 5 of 50

Unemployment Rate: 44 of 50

Average Salary: 40 of 50

~~

No. 9 (tie): San Diego, Calif.

(San Diego-Carlsbad-San Marcos, Calif.)

Cost of Living: 35 of 50

Housing Opportunity: 41 of 50

Unemployment Rate: 27 of 50

Average Salary: 16 of 50

~~

No. 9 (tie): Newark, N.J.

(Newark-Union, N.J./Pa.)

Cost of Living: 40 of 50

Housing Opportunity: 44 of 50

Unemployment Rate: 23 of 50

Average Salary: 12 of 50

~~

No. 11: Philadelphia, Pa.

(Philadelphia, Pa.)

Cost of Living: 35 of 50

Housing Opportunity: 38 of 50

Unemployment Rate: 23 of 50

Average Salary: 21 of 50

~~

No. 12: Portland, Ore.

(Portland-Vancouver-Beaverton, Ore.)

Cost of Living: 19 of 50

Housing Opportunity: 39 of 50

Unemployment Rate: 28 of 50

Average Salary: 30 of 50

~~

No. 13 (tie): Memphis, Tenn.

(Memphis, Tenn./Miss./Ark.)

Cost of Living: 8 of 50

Housing Opportunity: 15 of 50

Unemployment Rate: 42 of 50

Average Salary: 48 of 50

~~

No. 13 (tie): Tampa, Fla.

(Tampa-St. Petersburg-Clearwater, Fla.)

Cost of Living: 16 of 50

Housing Opportunity: 22 of 50

Unemployment Rate: 38 of 50

Average Salary: 37 of 50

~~

No. 15: Orlando, Fla.

(Orlando-Kissimmee, Fla.)

Cost of Living: 5 of 50

Housing Opportunity: 50 of 50

Unemployment Rate: 32 of 50

Average Salary: 45 of 50

~~

No. 16: St. Louis, Mo.

(St. Louis, Mo./Ill.)

Cost of Living: 28 of 50

Housing Opportunity: 11 of 50

Unemployment Rate: 35 of 50

Average Salary: 36 of 50

~~

No. 17: Jacksonville, Fla.

(Jacksonville, Fla.)

Cost of Living: 11 of 50

Housing Opportunity: 17 of 50

Unemployment Rate: 35 of 50

Average Salary: 44 of 50

~~

No. 18: San Francisco, Calif.

(San Francisco-San Mateo-Redwood, Calif.)

Cost of Living: 46 of 50

Housing Opportunity: 49 of 50

Unemployment Rate: 8 of 50

Average Salary: 2 of 50

~~

No. 19 (tie): Boston, Mass.

(Boston-Quincy, Mass.)

Cost of Living: 45 of 50

Housing Opportunity: 37 of 50

Unemployment Rate: 13 of 50

Average Salary: 9 of 50

~~

No. 19 (tie): Warren, Mich.

(Warren-Troy-Farmington Hills, Mich.)

Cost of Living: 28 of 50

Housing Opportunity: 2 of 50

Unemployment Rate: 46 of 50

Average Salary: 28 of 50

~~

http://www.dqnews.com/Articles/2009/News/California/Southern-CA/RRSCA090415.aspx

http://www.forbes.com/2009/05/06/cities-expensive-top-lifestyle-real-estate-overpriced-cities_print.html

http://www.latimes.com/business/la-fi-homes5-2009may05,0,2234983.story

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COMMERCIAL MARKETPLACE MAY BE STARTING TO IMPROVE

August 1, 2009 on 8:11 pm | In CHARTS + STATISTICS, FASCINATING INDUSTRIAL REAL ESTATE INFORMATION, Trends, Uncategorized, all, statistics | 4 Comments

 By Jodi Summers

The residential real estate market may be starting to stabilize in Southern California, but the industrial and office is still on the slide…but the rate of decline has not increased. In all its twisted logic, the Boxwood Means Inc. a research company that specializes in small-capitalization properties, concludes that the lack of an increased drop could signal that the market might be close to reaching its cyclical bottom.

Nationally, rents at office properties with less than 50,000 square feet fell by 27 basis points in May to $18.21/sf, per year, while industrial properties, fell 61 bp to $7.63/sf. Those rates of decline are similar to the drops in previous months. Boxwood Means Inc. reports that on a relative basis, that’s good news.

Even relatively positive news is better than what’s been happening in the recent past. Records show that rents have fallen at industrial properties for 18 months straight and at office properties for 12 months.

Statically, larger-cap properties have suffered greater declines in rent. According to Reis Inc., national office rents fell by 4.1% in the first quarter, to $24.08/sf, from their peak in the second quarter of 2008. During the same period, rents at small-cap companies fell by only 1.67 percent, to $18.31/sf.

FYI, Boxwood Means compiles property-level operating and sales data on small-cap properties through a partnership with LoopNet Inc. It has found a strong correlation between the performance of the residential housing market and small-cap commercial properties and noted that the residential market has been showing signs of stabilization of late. The same could be said of the small-cap commercial market.

(see BUY SOON – THE SOCAL REAL ESTATE MARKET IS STABLIZING - http://www.santamonicapropertyblog.com/?p=1256) small-cap commercial properties “might also be finding a market floor,” Boxwood Means said, noting that such properties are “highly dependent on neighborhood-based businesses and residential communities.”

Of course there is a wide disparity among geographic regions, with the Southeast being especially hard hit and the Northeast relatively unscathed. These trends mirror the residential housing market.

“Financing availability has been a differentiator that has propped up the small-cap sector,” Boxwood Means said. The lack of financing, prompted by the shutdown of the CMBS market and a substantial pullback by other traditional lenders, such as life insurers, has put the larger-cap market into a tizzy.

http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=8167&sourcecode=1lntd009

http://www.boxwoodmeans.com/

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