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
| Jun 18, 2014
Ware Malcomb names Sorensen Engineering Regional Manager
New hire will oversee firm's civil engineering practice in Los Angeles, San Diego, and Irvine.
| Jun 18, 2014
JLG Architects hires 31 to keep up with 'shale gale' work
Construction boom fueled by 'shale gale' brings rapid growth to North Dakota firm.
| Jun 18, 2014
Arup uses 3D printing to fabricate one-of-a-kind structural steel components
The firm's research shows that 3D printing has the potential to reduce costs, cut waste, and slash the carbon footprint of the construction sector.
| Jun 18, 2014
Architecture Billings Index shows increase in design activity
The American Institute of Architects reported that the May ABI score was 52.6, up sharply from a mark of 49.6 in April. This score reflects an increase in design activity.
| Jun 17, 2014
Must see: If music were architecture in 27 illustrations
From Miles Davis to Björk to Manu Chao to Bach, Babina visualizes how these sounds will look like if they were visible in the form of architecture.
| Jun 17, 2014
Nation's largest Thai Buddhist temple opens near Boston
The $60 million facility built in honor of King Rama IX of Thailand is the largest Thai Buddhist temple outside of Thailand.
| Jun 17, 2014
U.S. Census report examines why Americans move
According to the U.S. Census Bureau, 35.9 million people moved between 2012 and 2013, meaning that 11.7% of the U.S. population moved in one year. The report seeks to examine why.
| Jun 17, 2014
World's tallest pair of towers to serve as 'environmental catalyst' for China
The Phoenix Towers are expected to reach 1 km, the same height as Adrian Smith and Gordon Gill's Kingdom Tower, but would set a record for multiple towers in one development.
| Jun 16, 2014
6 U.S. cities at the forefront of innovation districts
A new Brookings Institution study records the emergence of “competitive places that are also cool spaces.”
| Jun 13, 2014
Gilbane Building Company names new president and chief operating officer
Gilbane Building company hires new president and COO
