Brent Hopkins
The office and industrial real estate markets will carry the momentum of this year's rebound into 2005, University of Southern California forecasters say in a report released today.
A growing economy in Los Angeles County should add jobs in the battered manufacturing sector and stoke the industrial-properties market, according to the Casden Forecast from USC's Lusk Center for Real Estatecolor>. As that creates more jobs, corporate expansion will then create a need for more office space and keep pushing up occupancy in the office market.
While neither industrial nor office properties are as hot as they were in the late 1990s, both markets remain well-positioned for the coming year, said Delores Conway, the Casden Forecast director. The San Fernando Valley area, with more room for industrial expansion and good transportation access, is faring particularly well.
"It's slow and steady in the Valley, but, my goodness, it's so much better than the bleeding we've endured," she said. "We expect the solid performance to continue."
Valley industrial vacancy rates dropped to 3.8 percent in the current quarter, higher than in most areas of Los Angeles County, but down significantly from the 4.6 percent recorded in the same period a year ago. Conway expects the steady decline to continue in industrial vacancies, with office vacancies soon on the same slope.
The Valley also commanded the highest industrial leasing rates in the county, fetching 62 cents per square foot. Though that slipped slightly from last year's 63 cents, it was at least 9 cents higher than the price in any other area of the county.
Leasing has been softer recently, according to Grubb & Ellis Co. research analyst Melissa Ertek, with more companies looking to buy property. She expects leasing to pick up in the coming year, however.
"Leasing has been soft in the last few years, since buying was so hot," said the Sherman Oaks-based analyst. "But it's picking up, and there's a lot of deals we see in the works. There's definitely activity in the market."