SOCAL Industrial Rents Predicted To Rise

The USC Lusk Center for Real Estate’s 9th annual Casden Southern California Industrial and Office Forecast analyzes economic data, provided by Grubb & Ellis, on rents, vacancies, and transactions for office and industrial markets in Los Angeles, Orange, Riverside and San Bernardino counties.

The findings for Southern California industrial real estate were all positive. Key points include:

Los Angeles County

*With the nation’s largest port and tightest industrial market, industrial rents are expected to increase by 10.5% over the next two years

*The Inland Empire may enjoy the ripple effect as companies seek less expensive alternatives.

*Los Angeles remains one of the tightest industrial markets in the country, with a 3.3% vacancy rate. Even with the approximately 250,000 square feet of industrial space currently under construction, rents are expected to rise in the next two quarters.

* SBA financing for industrial parcels below $10 million may lure buyers.

Orange County

* Proximity to LA and Long Beach ports, strong manufacturing base and no new construction in 2009 will help to keep industrial vacancy rates low; could peak in mid to late 2010.

* Orange County will lag LA County in industrial recovery due to higher rents and higher vacancies.

*Increased demand for industrial space will cause vacancy rates to fall 2.1 percentage points over the next two years.

Inland Empire Forecast

*The Inland Empire office market will continue to experience moderate increases in vacancy rates and decreases in rents.

*An exception is the Ontario Airport area, which showed 105,000 square feet of positive absorption as companies seek locations near transportation arteries.

* Chino and Temecula could be first industrial markets to bounce back thanks to relatively low vacancies and a prime location on the I-215 corrido

*With the affordable pricing, many owner/user entities are now jumping into the market as companies seek to lock in industrial space.

*While more than 2.2 million square feet of industrial space came on line last year, the increase in demand for industrial space will push rents a much as 6.6% higher.

* Overall industrial markets begin recovering next year but some submarkets will lag from overbuilding.

*With the affordable pricing, many owner/user entities are now jumping into the market as companies seek to lock in industrial space.

*While more than 2.2 million square feet of industrial space came on line last year, the increase in demand for industrial space will push rents a much as 6.6% higher ( credit j.summers so cal re blog)

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