Download full Forecast Report "Heightened traffic at the ports of Los Angeles and Long Beach will create more jobs and an increased need for warehousing across Southern California. And the expected growth nationwide in green technology, education and healthcare should bode well for the recovery of LA's office markets in 2011," said Tracey Seslen, Ph.D., co-author of the Casden Real Estate Economics Forecast. "Considerable downward pressures on office rents will continue, however, due to job losses across the board. The resulting drop in the value of many vacant office buildings will present new opportunities for cash buyers willing to wait out this downturn," she added. Richard K. Green, Ph.D., director of the USC Lusk Center and a Forecast co-author, pointed out that even though Riverside and San Bernardino counties have some of the highest unemployment rates in the country, "companies located in coastal areas will be setting up satellite offices in the Inland Empire where there is sufficient land and cheaper rental rates." Parts of the region will wait a long time for recovery, he pointed out, especially San Bernardino, which was substantially overbuilt. The annual Casden Real Estate Economics Forecast analyzes economic data on rents, vacancies, transactions, and employment for office and industrial markets in Los Angeles, Orange, Riverside and San Bernardino counties. The market data was supplied by Grubb & Ellis. The following summarizes key findings in the current Casden Forecast: Los Angeles County Forecast - With continued job losses and 1.5 million SF of office space under construction, office rents will continue their downward trend; may level out early 2011 - Highest vacancy and lowest rents among office properties expected in areas with high concentration of financial services including Westwood and Culver City - Large amount of new construction in San Fernando Valley keeps a lid on office rents in northern parts of the county - SBA financing for industrial parcels below $10 million may lure buyers Orange County Forecast - 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 - Office rents could fall 20-30% as landlords redouble their efforts to retain tenants Inland Empire Forecast - Office vacancy rates are likely to increase as jobs losses top national averages - Abundant sublease space and new construction will keep office rents low - Overall industrial markets begin recovering next year but some submarkets will lag from overbuilding - Chino and Temecula could be first industrial markets to bounce back thanks to relatively low vacancies and a prime location on the I-215 corridor
December 10, 2009