The University of Southern California Lusk Center for Real Estate’s annual analysis of industrial and office real estate in Los Angeles County, Orange County and the Inland Empire shows signs of a slow market recovery.
The 10th Annual Casden Southern California Industrial and Office Forecast reveals that all three areas experienced job growth and increased demand for both property types in 2011. An analysis of each area’s submarkets found lower vacancy rates in 11 of 17 office submarkets and 11 of 14 industrial submarkets. On the rent side, four office submarkets and eight industrial submarkets experienced increases. Overall, declines were smaller than in the previous two years.
“Although Southern California is a long way from pre-crisis levels of economic health, the improved employment picture and profound turnaround in the industrial market are signs of a slow recovery,” said study author Tracey Seslen. “The office market is only slightly improved over last year and vacancy rates may continue to fall for many months before we see rents stabilize.”
As a result, while office demand is expected to grow over the next two years, office rents were down for the third straight year and will continue to decline. On the industrial side, all three markets are expected to see ongoing declines in vacancies and increases in rents over the next two years.
In particular, the Inland Empire’s industrial market – the top performer in 2011 with a 6.4% increase in rents and nearly 17 million square feet of net absorption – is expected to see more growth in the next two years, but the magnitude will depend on rail and port activity.
“Sovereign risk in Europe, geopolitical turmoil and the growing U.S. debt crisis are undermining consumer confidence. Port and rail traffic, particularly activity at the Port of Long Beach, is down and could hinder the positive outlook for industrial rents,” Seslen said. BD+C
Related Stories
Giants 400 | Aug 4, 2015
GIANTS 300 REPORT: Top 64 Architecture/Engineering Firms
Stantec, HOK, and Callison RTKL top Building Design+Construction's 2015 ranking of the largest architecture/engineering firms in the United States.
Giants 400 | Aug 4, 2015
GIANTS 300 REPORT: Top 106 Architecture Firms
Gensler, Perkins+Will, and Kohn Pedersen Fox top Building Design+Construction's 2015 ranking of the largest architecture firms in the United States.
Giants 400 | Aug 4, 2015
ARCHITECTURE GIANTS: 21 practice management innovations from architecture Giants
Design firms have gone all out with management innovations in the last year. Check out which ones might work for your firm.
Architects | Aug 4, 2015
Frank Lloyd Wright School of Architecture closer to independent incorporation
The school is halfway to its first fundraising milestone, but is facing a major deadline at end of this month.
Industrial Facilities | Aug 3, 2015
Architect Jacques Rougerie envisions floating city to function as roving laboratory
The manta ray-shaped vessel will be completely self-sustaining, run on marine energy, and produce no waste.
Cultural Facilities | Aug 3, 2015
Funding needed for Washington's Desert Storm memorial
The National Desert Storm Memorial Foundation has a $25 million goal for the project.
Sports and Recreational Facilities | Jul 31, 2015
Zaha Hadid responds to Tokyo Olympic Stadium controversy
“Our warning was not heeded that selecting contractors too early in a heated construction market and without sufficient competition would lead to an overly high estimate of the cost of construction,” said Zaha Hadid in a statement.
Architects | Jul 30, 2015
The Lego Architect: Book offers simple how-to steps for recreating iconic buildings with Legos
The book features famous buildings accompanied with a photograph and drawing of the Lego model of the building, and a list of all the Lego pieces needed to complete a model of the building.
Transit Facilities | Jul 30, 2015
Snøhetta designs ring-shaped cable car station in Italian Alps
In Snøhetta’s design, two cylindrical rings embedded into the existing topography, each at different elevations, will be connected by a cable car. During the minute-long cable car journey, passengers can enjoy views of the city and of the Italian Alps.
Office Buildings | Jul 29, 2015
Design plans for Fannie Mae’s new HQ revealed
The developer/owner, Carr Properties, envisions a 1-million-sf plus mixed-use center with a large retail pavilion.