LOS ANGELES - Slow-moving indicators in the office and industrial markets camouflage the active sales and leasing activity across Los Angeles and Orange counties and the Inland Empire, according to the Casden Real Estate Economics Forecast by the USC Lusk Center for Real Estatecolor>.
"We've come through the recession with new job growth and optimism that the economy will continue to grow at a slow and steady pace," said Delores Conway, Ph.D., director of the Casden Forecast.
"Economic activity occurring below the radar screen bodes well for office and industrial markets across the region," Conway said.
According to the forecast, the Inland Empire remains the market leader with a robust economy that encourages development and employment. The forecast expects a 5 percent growth there in 2005. Construction remains active in the area and the region will show the greatest amount of new development over the next two years.
In Los Angeles, the San Fernando Valley submarket offers the strongest clues that a recovery is under way. Vacancy rates there dropped from 12.8 percent in 2003 to 10 percent in 2004. Pasadena and Burbank will continue their leadership in rising rents and declining vacancies, according to the forecast.
The Orange County Airport submarket showed the strongest net absorption, with 900,000 square feet in 2004, accounting for almost half of all leased space in the county. Vacancy rates should continue to decline at a steady pace because of limited construction and increased demand. Landlords should begin to see improvements in asking rents and office lease rates in the next two years, according to the forecast.