The Southern California industrial market continues to generate superlatives -- highest rents, lowest vacancies, most construction, greatest absorption -- but 2008 looks to a see if not an actual slowdown at least a tapering off in the rate of growth. Delores Conway, director of the Casden Real Estate Economics Forecast at the University of Southern California Lusk Center for Real Estate, terms the current situation a "temporary mid-cycle correction" rather than a downturn, with the expectation that the market will ramp back up later in the year. "We're going through a pause," she tells GlobeSt.com. "It's a time to catch our breath and prepare for the next wave. Most industrial developers are welcoming the slowing. The pace has been almost too fast. All this money has been pouring in, and sales and lease activity has been unbelievable. I think most people agree we need a break to catch our breath and assess what the next steps should be." The Lusk Center released the 2008 Casden forecast in mid December based on statistics from the first three quarters of '07. But Conway assures that nothing has happened since October to alter the report's findings. "Demand remains solid on both the sales and leasing ends. Cap rates are holding. Rents are holding. It's more a question of slowing acceleration than deceleration," she says.
January 14, 2008