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
| May 7, 2012
4 more trends in higher-education facilities
Our series on college buildings continues with a look at new classroom designs, flexible space, collaboration areas, and the evolving role of the university library.
| May 7, 2012
Best AEC Firms: MHTN Architects nine decades of dedication to Utah
This 65-person design firm has served Salt Lake City and the state of Utah for the better part of 90 years.
| May 7, 2012
2012 BUILDING TEAM AWARDS: TD Ameritrade Park
The new stadium for the College World Series in Omaha combines big-league amenities within a traditional minor league atmosphere.
| May 7, 2012
2012 BUILDING TEAM AWARDS: Fort Belvoir Community Hospital
A new military hospital invokes evidence-based design to create a LEED-certified facility for the nation’s soldiers and their families.
| May 7, 2012
2012 BUILDING TEAM AWARDS: Audie L. Murphy VA Hospital
How a Building Team created a high-tech rehabilitation center for wounded veterans of the conflicts in Iraq and Afghanistan.
| May 3, 2012
2012 BUILDING TEAM AWARDS: Rush University Medical Center
This fully integrated Building Team opted for a multi-prime contracting strategy to keep construction going on Chicago’s Rush University Medical Center, despite the economic meltdown.
| May 3, 2012
U of Michigan team looking to create highly efficient building envelope designs
The system combines the use of sensors, novel construction materials, and utility control software in an effort to create technology capable of reducing a building’s carbon footprint.
| May 3, 2012
Best commercial modular buildings and marketing programs recognized
Judges scored entries on architectural excellence, technical innovation, cost effectiveness, energy efficiency, and calendar days to complete.
| May 3, 2012
Zero Energy Research Lab opens at North Texas
The living lab—the only one of its kind in Texas—is designed to test various technologies and systems in order to achieve a net-zero consumption of energy.