Report Touts LA Retail

While most brokerage firms place heavy emphasis on cap rates and prices when reviewing market activity, the Sperry Van Ness report, titled "Top 10 Markets To Watch," focuses on economic indicators. The Irvine-based brokerage says that focusing on those indicators is a means of identifying how properties are going to perform in the future rather than how they have fared in the past.

The report lists Los Angeles as the No. 1 retail investment market to watch in view of expected growth of 100,000 new residents and 80,000 new jobs in 2006. Additionally, Los Angeles is expected to post the strongest retail sales growth of the firm's markets to watch in 2006 at 7.9%, with vacancy rates improving as well.

Orlando comes in at No. 2 on the strength of the relatively small amount of new space slated for completion this year, about 1.4 million sf, which is less than one-half the average of the past six years. The region will record its lowest vacancy in seven years at 5.3% and is expected to grow by 52,000 new residents and 44,500 new jobs this year.

Frosh says that forward-looking economic factors are a better gauge of where a market is going than statistics like cap rates and sales prices, which look at past performance. Among the economic factors that the company studies are population and employment growth, personal income and vacancy.

Other top-ranked markets in the Sperry Van Ness report were Puget Sound at No. 3, West Palm Beach and Ft. Lauderdale at No. 4 and San Diego at No. 5. Spots six through 10 are Phoenix, San Francisco/Oakland, Austin, Denver and San Jose.

All of the top 10 markets are expected to register strong population and employment growth in 2006, leading to increased retail sales, according to the report. Sperry Van Ness analyzed more than 100 primary, secondary and tertiary markets to produce the report.