Jodi Summers = Industrial Real Estate

SOCAL INDUSTRIAL REAL ESTATE SNAPSHOT- DECEMBER 2011 > IT’S ALL ABOUT THE PRIVATE SECTOR

November 30, 2011 on 12:23 pm | In Charts + Statistics, Economy, Funny...Money, Investment Opportunities, Market Snapshot, Trends, Uncategorized | 2 Comments

by Jodi Summers

Hello. Nice to see you again. Before we get too deep into industrial property sales and leasing trends, let’s look at what’s happening in Los Angeles County. At the end of 3Q 2011, the average asking price for industrial properties in the metro area for the month was $134.11 per square a new three-year low, according to Loopnet.com. This shows a drop of 5.9% year-over-year, and a decline of 0.9% from the end of 3Q 2011. The three-year high for asking prices is $192.19, which was set in November 2008.

Nationwide, industrial real estate sales are out of the abyss. Industrial sales volume is on a steady rise. Investment value and the low cost of debt are two strong economic motivators for industrial property buyers.

As the official reports are presented, offering 2011 wrap-ups and 2012 projections for industrial real estate, we find the predictions are what you’d expect. To sum it up hundreds of man-hours of research, the news more of the same…languishing market with slow growth…. and Los Angeles continues to be one of the strongest marketplaces.

As Marcus + Millichap astutely noted in their 2012U.S. Economic, Office and Industrial Market Outlook, we are in a transition period from heavy reliance on government initiatives to prop up our economy to a tentative transition to the private sector. The question being, when will the private sector feel comfortable enough with the economy to move forward? When the private sector regains faith in the country is when the economy will move forward.

In case you were wondering why industrial net absorption is growing at a considerably higher pace than jobs, investors have been purchasing industrial real estate.

Savvy investors have been leaning toward single tenant NNN industrials recently, noting that industrial cap rates are out-performing 10-year Treasury rates.

Job growth is coming around.  As you would expect, the report notes that employment numbers are slowly improving. California’s October unemployment rate fell to 11.7%, down -0.8% in that 12 month period, notes California Employment Development Department.

Nationwide, the U.S. unemployment rate dropped to 9.0% in October from 9.1% in September. Los Angeles County’s rate dropped to 11.9% in October 2011from 12.7% in October 2010.

Things are improving, but not so fast. Construction started to improve in 1Q, but speculative construction is in a holding pattern.

It is expected that in 2012 the global economic, geopolitical uncertainty, the maturing of loans on over-leveraged properties as well as our presidential election will keep the reigns on significant market escalation.

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.

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

http://event.on24.com/view/presentation/flash/EventConsoleNG.html?uimode=nextgeneration&eventid=368459&sessionid=1&username=&partnerref=&format=fhvideo1&mobile=false&flashsupportedmobiledevice=false&helpcenter=false&key=B83054CAD6C30E94FB80A5D1025E3AC1&text_language_id=en&playerwidth=1015&playerheight=650&eventuserid=56530216&contenttype=A&mediametricsessionid=47162579&mediametricid=778751&usercd=56530216&mode=launch#

http://wcc.on24.com/event/36/84/59/rt/1/documents/slidepdf/11_07_11_office_and_industrial_webcast_final.pdf

Source: http://www.edd.ca.gov/About_EDD/pdf/urate201111.pdf