SOCAL INDUSTRIAL REAL ESTATE SNAPHOT ~ JANUARY 2014 ~ BIG MONEY AHEAD

December 31, 2013 on 11:52 am | In Bravo, Charts + Statistics, Economy, Fascinating Information, Investment Opportunities, Market Snapshot, New Developments, Trends, Uncategorized, world | 4 Comments

by Jodi Summers

On the list of 2014 New Year’s resolutions – invest in industrial real estate in the Los Angeles area. The experts say rents are expected to grow by more than 25% in the next four years…2018 will be so prosperous.

Here’s why the price hikes are coming…

E-COMMERCE

1. The National Retail Federation projects 2013 holiday sales to reach $602.1 billion. Analysts tracking holiday sales expect online shopping to account for nearly 40%, of all spending this year, This is up from 26% in 2012, and well ahead of expectations…which is why UPS was having such significant delivery issues in the 2013 holiday season. Nobody anticipated a 14% jump in deliveries.

Industrial space is being designed and located where it can meet the needs of online retailers with ever faster delivery times.

THE PANAMA CANAL

2. The Panama Canal Expansion

The Third Set of Locks Expansion of the Panama Canal doubles the capacity of the Panama Canal by 2015 by allowing more and larger ships to transit.

The $5.2 billion project creates a new lane of traffic along the canal by constructing a new set of locks. Ships as large as 12,000 or more TEUs (20-foot equivalent units—a measurement of container ship capacity) will be able to fit through the new locks vs. the 5,000 TEU ships that currently transit the Canal (which opened in 1914).  The Canal is owned by Panama and is currently used more for Latin American shipping. The country anticipates that the expansion of the 100-year-old canal to make Panama a first-world country.

Pundits, forecasting the impact on our local ports have concluded that the Ports of LA and Long Beach are the most efficient port system in America and will “remain the leader for the foreseeable time,” thanks to our state-of-the-art ports and an efficient supply chain.

Locally construction to accommodate the expansion includes the $649.5-million replacement for the Port of Long Beach’s Gerald Desmond Bridge, to be completed in 2016.

It’s not just here in Metro Los Angeles, where our economy is larger than Saudi Arabia.(We’re top 25 on a worldwide scale.)  The demand for industrial real estate is rising across the country, especially around ports on the East and West Coasts. The experts say demand is strongest in Los Angeles, Miami and New York-New Jersey. The growth of e-commerce is having significant impact on the industrial market as the trend towards bigger and more efficient distribution centers has resulted in a shortage of class A warehouse space over 500,000 sf in the nation’s logistics hubs.

During the third quarter 2013, five large Industrial buildings totaling 767,673 square feet were completed in the Los Angeles market area. Total Industrial inventory at the end of 3Q 2013 was 988,123,598 square feet in 36,936 buildings, according to Costar in their most recent market report. The Flex sector consisted of 61,485,351 square feet in 2,810 projects. Within the Industrial market there were 4,830 owner-occupied buildings accounting for 195,937,860 square feet of Industrial space.

Despite steady demand, rents overall remained at stubbornly low levels, in part because the recovery favors newer product. After marginal growth in 2013, the experts anticipate that 2014 will see strong appreciation in most major markets.

Los Angeles, because of our significant land constraints and relatively little new construction, will be the big winner. Warehouse vacancy is at its lowest rate in four years, declining ten quarters in a row after peaking in the first quarter of 2010. Los Angeles and Orange County’s rents are expected to grow by more than 25% in the next four years.

For more information 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.

**

http://www.uli.org/press-release/2014-emerging-trends-in-real-estate/

http://www.socalindustrialrealestateblog.com/?p=2069

http://www.costar.com/News/Article/Market-Trend-Los-Angeless-Industrial-Deliveries-Construction-and-Inventory/155140?ref=100&iid=366&cid=383F14EEE265B182474DA2442BACBBBF

http://cdn.laedc.org/wp-content/uploads/2013/07/LAEDC-2013-2014-Mid-Year-Economic-Forecast.pdf

http://flyers.cushmanwakefield.com/flyers/CW_Industrial_RE_Forecast_2013-16_Final.pdf

http://www.uli.org/wp-content/uploads/ULI-Documents/Emerging-Trends-in-Real-Estate-Americas-2014.pdf

http://www.dredgingtoday.com/2013/12/31/panama-canal-14-years-under-panamanian-administration/

http://seattletimes.com/html/businesstechnology/2022500100_amazonshoppingxml.html

http://www.nrf.com/modules.php?name=Pages&sp_id=1140

http://1.bp.blogspot.com/-LQfcceMzyJY/UaX4nE6Zl9I/AAAAAAAAFoI/-4G2vZyzwF0/s1600/bright-future-ahead.jpg

http://www.laobserved.com/biz/bridge.JPG

 

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  1. The use of and participation in rituals has been greatly curtailed. As historian Peter Burke argues, we’ve just replaced old rituals with new ones: “If most people in industrial societies no longer go to church regularly or practice elaborate rituals of initiation, this does not mean that ritual has declined. All that has happened is the new types of rituals—political, sporting, musical, medical, academic and so on—have taken the place of the traditional ones.” But the new rituals – watching sports, attending music festivals, checking Facebook, shopping, visiting a strip club on your 18th birthday — are light on nourishment and do not satisfy. Traditional rituals provided a mechanism by which humans could channel and process that which was difficult to grapple with – death, maturation, aggression – allowing the participant to discover new truths about themselves and the world. New rituals, if they can even really be called such, attempt to deny anything ugly in life (lest that lead you to close your wallet) and present a shiny, glossy façade — “confetti culture” – that facilitates passive consumption and turning away from examining given assumptions.

    Comment by AOM — December 31, 2013 #

  2. Construction is 60 percent complete for the second phase of the incoming Expo Light Rail, which could open to the public by late 2015.

    Comment by SMDP — May 22, 2014 #

  3. The California High-Speed Rail Authority will hold a series of public meetings – the first public meetings in two years – in Southern California this week to discuss among other things, the route the bullet train will take between the 60-mile segment from L.A. to Palmdale, according to the San Gabriel Valley Tribune.

    “We are inviting the public and the media to attend these meetings to get the latest update on the high-speed rail project in their neighborhoods,” rail authority spokeswoman Adeline Yee wrote in an email.

    The public was invited to learn more about the approximately $67.6 billion project and ask questions. The alignment alternatives portion of the Draft Environmental Impact Report and Environmental Impact Statementwill include comments, according to the Tribune.

    California voters approved the project on the November 2008 ballot. It has an estimated completion date of 2028.

    Comment by Loopnet — May 22, 2014 #

  4. Marking an historic vote of confidence in Metro Rail subway construction in Los Angeles, the L.A. County Metropolitan Transportation Authority (Metro) joined federal, state, and local elected officials on May 21 to announce the receipt of a $1.25 billion Full Funding Grant Agreement (FFGA) from the Federal Transit Administration to help pay for the first nearly four-mile, $2.821 billion segment of the long-awaited Metro Purple Line Extension Project toward West Los Angeles

    Comment by SM Mirror — June 3, 2014 #

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