The future looks good for Southern California's office and industrial markets, according to a real estate study released today. More businesses in Los Angeles and Orange counties are renting office space, and the growth is expected to increase through 2004, according to the Casden Real Estate Economics Forecast released today by the USC Lusk Center for Real Estate. The Los Angeles County office market should begin to show a noticeable turnaround beginning early next year thanks to expansion in manufacturing and growth in service employment, according to the forecast. Rents will stop their two-year downward creep next year and a reduction in concessions will be the first order of business for property owners facing increased demand for space, study authors said. Pasadena and Burbank will continue their leadership with growing rents and declining vacancies, and properties in the low cost Mid-Wilshire submarket are poised to experience strong demand, they said. The West Los Angeles submarket will see some life as lease activity picks up in and around cities such as Marina Del Rey, but significant improvements are not expected in this submarket until 2005, when capital should return to the high tech and communications sectors in larger volumes. The overall picture for the Los Angeles County industrial market will be generally stable over the next two years, according to the forecast. The manufacturing sector will be a key beneficiary of a 1 to 2 percent growth in county-wide employment that the Casden Forecast expects for both 2004 and 2005. The rate translates into roughly 60,000 new jobs per year. Orange County has not recovered significantly from the dive in technology jobs that took place in 2001, but employment will show token growth in 2004 and approach a respectable 3 percent in 2005. Orange County's reliance on telecommunications, high tech and business services has been a liability of late but will prove to be an asset in the next two years as the economy expands, according to the forecast. Upward pressure could push office rents up by 10 percent between now and 2005. By the end of next year, the county should see vacancy levels close to their pre-recession levels of 12 to 13 percent. The most activity in Orange County will center around John Wayne Airport, which has been the focal point of the market weakness the past three years.
December 4, 2003