And the winner of this year’s National Industrial Index for the most valuable industrial real estate is…Los Angeles. High demand exists for modern Class A bulk warehouse facilities in markets with proximity to major ports with intermodal transportation hubs (thank you Alameda railway), and access to air cargo nodes. Brisk leasing and build-to-suit activity ties directly or indirectly to port-related activities in many of the top-ranked markets – have the two largest ports in the United States is a beautiful thing for area warehousing. According to Marcus & Millichap’s Third Quarter Industrial Research Report, as our region’s strength continues to grow in the energy, technology, trade, healthcare and manufacturing Los Angeles area warehousing leads the way.
Check out the big chart, then scroll to the end for more tidbits you would like to know about the Los Angeles 3Q 2013 Market Outlook….
■ 2013 National Industrial Index rank: 1, up one place from 2012. Yeah! L.A.! Rising trade volumes and port activity, low vacancy and rent gains moved Los Angeles to the top of the Index.
■ Investment Forecast: Industrial transaction volume climbed 6.9% over the past year. The median sale price climbed 2.0% to $97 per square foot and the median cap rate compressed 30 basis points to 6.8%. Class B properties in infill submarkets proximate to the ports may offer a value add strategy for renovation and reposition.
■ Rent Forecast: Asking rents have posted gains for five consecutive quarters, rising to $6.46 as of the second quarter. Asking rent growth should approach 3.0%, rising to $6.53 by year end, although much stronger rent increases are anticipated in new product and existing Class A product.
■ Vacancy Forecast: Forecast net absorption of 6.5 million square feet will be the strongest in five years and more than double anticipated supply, resulting in a 10-basis point fall in the second quarter vacancy rate to 5.0% by year end.
■ Construction Forecast: Completions totaling nearly 3.0 million square feet will fetch rent premiums from tenants seeking functional, Class A space in the South Bay and Central submarkets proximate to the ports.
■ Employment Forecast: Los Angeles employment expanded by 85,100 in 2012, or 2.2%, and is expected to post similar gains by the end of the year.
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