(Save the dates: RealShare Apartments East comes to the Hyatt Regency in Miami, FL, on February 26, and RealShare Los Angeles comes to the Hyatt Regency Century Plaza in Los Angeles, CA, on March 27.)
LOS ANGELES-Industrial is the darling among real estate classes in the greater Los Angeles region, according to speakers at the recent Annual Real Estate Market Review and Forecast event held Downtown and presented by the AIR Commercial Real Estate Association. Industrial real estate performed better in L.A. than in any other region nationwide and is also the strongest category of commercial real estate in the four-county region itself, speakers said.
The more-than-200 people who attended the event also heard that real estate was looking better to Wall Street, with CMBS and REITs reporting improvement, according to economist Allen Greer, managing member of Greer Advisors LLC. REITS, in particular, “have taken off like a rocket,” Greer said.
Greer also underscored that out of 55 markets nationally, L.A. was number one in terms of lowest vacancy at 5%. However, he cautioned that property markets in first-quarter 2013 could be harmed by unpredictable events in both the world economy—such as ongoing crises in the Eurozone—and at home by uncertainty surrounding the federal budget and possible strikes at the ports of Los Angeles and Long Beach.
An industry panel made up of brokers, developers and a legal expert was generally upbeat. Rob Antrobius, SVP, market officer-Los Angeles for Prologis, said that demand for industrial space was continuing to rise throughout the region. “Although newer, class-A buildings have dominated the market in recent years, class-B has more than bounced back.”
In addition, Antrobius reported that owner-user sales are growing in popularity. “Our tenants are telling us they want to buy.”
In L.A. County, industrial real estate values can be expected to rise, according to John McMillan, executive director-industrial brokerage, Cushman & Wakefield of California Inc. “He pointed out that lease rates have not increased for several years, while demand continues to increase and the amount of land to develop is limited. “Rates are going to pop eventually. There’s nowhere to go but up.”
Brett Warner, principal of Lee & Associates-LA North, reported that the San Fernando Valley is one of the stronger submarkets in L.A. County, with prospective tenants currently “more stable, more confident” and possibly “interested in making a long-term commitment.” The Valley may appeal to investors because there’s room for rents to rise, he added. “Rates have not peaked, and demand will drive rates up.”
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