Southland office markets on the rise

Southland office markets on the rise Gregory J. Wilcox Reflecting an expanding economy, the commercial and industrial office markets will continue improving next year with rents rising and vacancy rates falling, says a report to be released today. Improvement will occur across Los Angeles County with the Inland Empire continuing its steady growth while fortunes perk up in the Burbank and Pasadena markets, says the University of Southern California Lusk Center's Casden Real Estate Economics Forecast. "Southern California's strong business performance, buoyed by economic diversity and continued growth in trade, bodes well for office and industrial markets through 2004," said forecast director Raphael Bostic. The most impressive market is Riverside's, whose robust rebound covers six consecutive quarters. The report found that the North Los Angeles market, which includes the San Fernando, Conejo, Simi and Santa Clarita valleys, will also benefit from the recovery. The industrial market vacancy rate, 6.7 percent for 2002, will dip to 4.5 percent this year and 3.75 percent next year. Rents will be basically flat, going to 63 cents a square foot next year from 62 cents this year. In the San Fernando Valley, the industrial market has been pulled in two directions, Bostic said. In the West Valley, rents fell to 65 cents from 75 cents in early 2002, reflecting the weak tech-sector market. Meanwhile, East Valley rents went from 61 cents to 72 cents. In the northern county, the office market vacancy rate should plunge to 12.5 percent next year, from 15.3 percent at the end of last year, while rents will remain flat in the $2.19-per-square-foot range. But this is still well below the Westside, the region's most-expensive market with rents of $2.74 a square foot. The same kind of trend is expected in the broader Los Angeles County market. Industrial rents will remain flat in the 50-cent range while vacancy rates will fall to 3.2 percent next year, from 4.3 percent this year. That's low enough so that the market is pretty much near capacity. The office-market vacancy rate will fall to 13.7 percent next year, from 16.1 percent this year, and rents will increase to $2.52 a square foot, from $2.45 a square foot. Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said it's good news and that the industrial sector is most impressive. "It's a very, very hot market and it's very interesting because in the central part of the city the vacancy rate is 1.8 percent, which means nothing is available."