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
Adaptive Reuse | Oct 22, 2024
Adaptive reuse project transforms 1840s-era mill building into rental housing
A recently opened multifamily property in Lawrence, Mass., is an adaptive reuse of an 1840s-era mill building. Stone Mill Lofts is one of the first all-electric mixed-income multifamily properties in Massachusetts. The all-electric building meets ambitious modern energy codes and stringent National Park Service historic preservation guidelines.
MFPRO+ News | Oct 22, 2024
Project financing tempers robust demand for multifamily housing
AEC Giants with multifamily practices report that the sector has been struggling over the past year, despite the high demand for housing, especially affordable products.
Performing Arts Centers | Oct 21, 2024
The New Jersey Performing Arts Center breaks ground on $336 million redevelopment of its 12-acre campus
In Newark, N.J., the New Jersey Performing Arts Center (NJPAC) has broken grown on the three-year, $336 million redevelopment of its 12-acre campus. The project will provide downtown Newark 350 mixed-income residential units, along with shops, restaurants, outdoor gathering spaces, and an education and community center with professional rehearsal spaces.
Office Buildings | Oct 21, 2024
3 surprises impacting the return to the office
This blog series exploring Gensler's Workplace Survey shows the top three surprises uncovered in the return to the office.
Healthcare Facilities | Oct 18, 2024
7 design lessons for future-proofing academic medical centers
HOK’s Paul Strohm and Scott Rawlings and Indiana University Health’s Jim Mladucky share strategies for planning and designing academic medical centers that remain impactful for generations to come.
Sports and Recreational Facilities | Oct 17, 2024
In the NIL era, colleges and universities are stepping up their sports facilities game
NIL policies have raised expectations among student-athletes about the quality of sports training and performing facilities, in ways that present new opportunities for AEC firms.
Codes and Standards | Oct 17, 2024
Austin, Texas, adopts AI-driven building permit software
After a successful pilot program, Austin has adopted AI-driven building permit software to speed up the building permitting process.
Resiliency | Oct 17, 2024
U.S. is reducing floodplain development in most areas
The perception that the U.S. has not been able to curb development in flood-prone areas is mostly inaccurate, according to new research from climate adaptation experts. A national survey of floodplain development between 2001 and 2019 found that fewer structures were built in floodplains than might be expected if cities were building at random.
Seismic Design | Oct 17, 2024
Calif. governor signs limited extension to hospital seismic retrofit mandate
Some California hospitals will have three additional years to comply with the state’s seismic retrofit mandate, after Gov. Gavin Newsom signed a bill extending the 2030 deadline.
MFPRO+ News | Oct 16, 2024
One-third of young adults say hurricanes like Helene and Milton will impact where they choose to live
Nearly one-third of U.S. residents between 18 and 34 years old say they are reconsidering where they want to move after seeing the damage wrought by Hurricane Helene, according to a Redfin report. About 15% of those over age 35 echoed their younger cohort’s sentiment.
