LOS ANGELES-Speakers at a commercial real estate forecastpresented recently at the Downtown Breakfast Club expect risingoffice vacancies and a slow recovery for retail, but the outlookfor the multifamily sector is promising. Three veterans of theindustry presented their outlooks on the downtown office leasingmarket, the retail outlook and the prospects for multifamily.

|

Steve Marcussen, Cushman & Wakefield executive director,told the Breakfast Club audience that, “The current climate ofeconomic uncertainty, exacerbated by looming tax hikes and murkyimplications of new healthcare legislation for small business, havecreated a standstill in leasing.” Marcussen said that the verallvacancy rate is 16.5%, including a vacancy factor of 17.5 % forclass A buildings, and those percentages are expected to rise.

|

James Rabe, senior vice president of real estate research firmKeyser Marston, delivered the outlook for retail. He said thatretail activity in Downtown and the region will recover slowly fromits current depressed levels. “It is likely to be three to sixyears before retail returns to its 2008 levels,” he said.

|

In the multifamily sector, H. Bruce Hanes, who has been involvedin the sale of more than $ 4.5 billion of apartment houses over thepast 40 years, said the outlook is quite promising over the nextfive years. “We see rents bottoming out in Los Angeles this yearand relatively little new construction in the Los Angeles area. Butfor a variety of socioeconomic reasons, we are quite optimisticabout the future,” said the CEO of Westlake Village-based HanesInvestment Realty. The less people see housing as an investmentvehicle and the more they see it as shelter, the more they willgravitate toward apartment house living in urban areas, hepredicted.

|

In his assessment of the office market, Marcussen said althoughthe absorption rate just managed to eke into positive territory inthe Central Business District in the first quarter, it has beennegative for two years. Also, leasing activity is depressed becauseof the increasing trend of people working at home or on theroaddue to advances in computers and other technology.Marcussen also said that, if there are a significant number ofdefaults by landlords on loans scheduled to mature in the next twoyears, the situation could get worse. In the worst case scenario,he added, it could be 10 years before there is any new officebuilding construction Downtown.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.