Vacancy rates are lowest in 15 years

Southern California's office and industrial markets showed dramatic improvement this year, with office vacancy rates in Los Angeles County falling below 10 percent for the first time in more than 15 years, an industry report reveals. The <b.2006 Casden Office and Industrial Market Forecast, released Tuesday by the USC Lusk Center for Real Estate, said average asking rents for office space in L.A. County rose 10.7percent over 2005. West Los Angeles posted a 15 percent increase in average rents, the highest of any submarket in Southern California. The San Gabriel Valley and Mid-Cities submarkets both saw increases of 9percent. That trend is expected to continue next year but at a slower pace, according to the report. Los Angeles County currently has 1.8 million square feet of office space under construction, primarily in West Los Angeles. The county's industrial market - the largest industrial center in the United States - also boasts the lowest vacancy rate at 1.6 percent. But as low as that rate is, the San Gabriel Valley has it beat, with an industrial vacancy rate of just 1.1 percent, according to Jack Kyser senior vice president and chief economist for the Los Angeles County Economic Development Corp. Delores A. Conway, director of the Casden Real Estate Economics Forecast, said growth in the Southland's office and industrial markets is especially welcome. "I think what we're seeing is an economy that is well-diversified," she said. "The housing slowdown is being offset by these other sectors that are picking up." Industrial construction activity is about half of last year's levels, at 4.4million square feet year-to-date, mainly occurring is the San Gabriel Valley and northern Los Angeles County. "There's limited land on which to build," Conway said. In a continuing trend, the Inland Empire is still the nation's top market for building big industrial warehouses and distribution centers. That's primarily because of the area's proximity to the ports of Los Angeles and Long Beach, the region's extensive transportation network and the availability of cheap land.