Thank you for sharing!

Your article was successfully shared with the contacts you provided.

[IMGCAP(1)]LOS ANGELES-Economic forces could boost the Southern Calfornia industrial markets next year, but the office sector will continue to languish, according to the latest USC Lusk Center Casden Forecast, issued this morning. The forecast says that strong growth in India and China should fuel demand for US goods, which will drive traffic to Southern California’s ports and will in turn generate strong demand for industrial warehouse space both close to the ports and in the Inland Empire.

[IMGCAP(2)]The office market will have to wait a while, however. The office sector recovery should begin in 2011, thanks to”expected growth nationwide in green technology, education and healthcare,” according to Tracey Seslen, co-author of the forecast. Seslen says that, “Considerable downward pressures on office rents will continue” next year, due to job losses across the board. However, she adds, “The resulting drop in the value of many vacant office buildings will present new opportunities for cash buyers willing to wait out this downturn.”

Richard K. Green, director of the USC Lusk Center and a forecast co-author, points out that although the Inland Empire’s Riverside and San Bernardino counties have some of the highest unemployment rates in the country, “companies located in coastal areas will be setting up satellite offices in the Inland Empire where there is sufficient land and cheaper rental rates.” Parts of the region will wait a long time for recovery, he points out, especially San Bernardino, which was substantially overbuilt.

The annual Casden Real Estate Economics Forecast analyzes economic data on rents, vacancies, transactions, and employment for office and industrial markets in Los Angeles, Orange, Riverside and San Bernardino counties. The market data was supplied by Grubb & Ellis.

For Los Angeles County, the forecast foresees continued job losses and office rents that may level out early 2011. The highest vacancy and lowest rents are expected in areas with high concentration of financial services including Westwood and Culver City.

For Orange County, the forecast says that proximity to the ports of Los Angeles and Long Beach, strong manufacturing base and no new construction in 2009 will help to keep industrial vacancy rates low. The county will lag Los Angeles in the industrial recovery because of its higher rents and higher vacancies. In the office sector, rents could fall 20% to 30% as landlords “redouble their efforts to retain tenants,” the forecasters say.

For the Inland Empire, the forecast expects office vacancy rates to increase as jobs losses exceed national averages. “Abundant sublease space and new construction will keep office rents low,” it says, and although the overall industrial markets will begin recovering next year, some submarkets will lag from overbuilding. “Chino and Temecula could be first to bounce back thanks to relatively low vacancies and a prime location on the I-215 corridor,” the forecast notes.

USC is providing a complete summary of the 2010 Casden Industrial and Office Market Forecast online starting Dec. 11 at www.usc.edu/casden.

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

Once you are an ALM digital member, you’ll receive:

  • 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

*May exclude premium content
Already have an account?


GlobeSt. INDUSTRIAL 2022Event

This conference brings together the industry's most influential & knowledgeable industrial real estate executives

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2022 ALM Global, LLC. All Rights Reserved.