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
| Aug 20, 2013
40 Under 40 retrospective: ‘U40s’ take on continuing ed, snake’s blood
Every month we’ll be touching base with past 40 Under 40 honorees to see what’s been happening in their professional and personal lives since winning the award. This month: An accomplished author of test-prep books and an architect who headed to China when the American economy turned sour.
| Aug 20, 2013
Top Data Center Architecture Firms [2013 Giants 300 Report]
Corgan, Gensler, HDR head Building Design+Construction's 2013 ranking of the largest data center architecture and architecture/engineering firms in the U.S.
| Aug 20, 2013
First look: $550 million Billie Jean King National Tennis Center renovation
The United States Tennis Association has announced its plans for a sweeping transformation of the USTABillie Jean King National Tennis Center that will include the construction of two new stadiums, as well as a retractable roof over Arthur Ashe Stadium. The transformation will be implemented in three phases to begin at the conclusion of the 2013 US Open, with the goal of overall completion by the 2018 US Open.
| Aug 15, 2013
Design-build project delivery holds steady at nearly 40% of nonresidential construction: DBIA study
The Design-Build Institute of America (DBIA), the only organization that defines, teaches and promotes best practices in design-build, has released research indicating that design-build project delivery represents nearly 40 percent of total market share in the United States, based on dollar value at the end of 2012.
| Aug 14, 2013
Five projects receive 2013 Educational Facility Design Excellence Award
The American Institute of Architects (AIA) Committee on Architecture for Education (CAE) has selected five educational and cultural facilities for this year’s CAE Educational Facility Design Awards.
| Aug 14, 2013
Sluggish gains in architect compensation due to weakness in construction sector: AIA survey
U.S. architecture firms have experienced modest improvements in business conditions over the last two years that has resulted in very small gains in compensation levels for staffs.
| Aug 14, 2013
Green Building Report [2013 Giants 300 Report]
Building Design+Construction's rankings of the nation's largest green design and construction firms.
| Aug 13, 2013
DPR's Phoenix office, designed by SmithGroupJJR, affirmed as world's largest ILFI-certified net-zero facility
The new Phoenix Regional Office of DPR Construction, designed by SmithGroupJJR, has been officially certified as a Net Zero Energy Building by the International Living Future Institute (ILFI). It’s the largest building in the world to achieve Net Zero Energy Building Certification through the Institute to date.
| Aug 8, 2013
Energy research animates science sector [2013 Giants 300 Report]
After an era of biology-oriented spending—largely driven by Big Pharma and government concerns about bioterrorism—climate change is reshaping priorities in science and technology construction.
