The Housing Chronicles Blog: Los Angeles Economic Forecast Conference - Commercial Real Estate

Thursday, June 30, 2011

Los Angeles Economic Forecast Conference - Commercial Real Estate

As part of its ongoing association with Beacon Economics, MetroIntelligence authored the commercial real estate section for the Los Angeles Economic Forecast Conference, which took place on June 21st in downtown Los Angeles.

If you'd like to read the section in its entirety, we've made it available for free on our Web site.

Please also register on our Web site to keep updated on future reports and presentations.

Click here to download the report.

Click here if you'd like to register for updates.

Here were some of the major findings from our report:
  • Due to economic uncertainty, businesses will continue to be conservative with capital spending and expansion, delaying such decisions until a rebound is evident (although health care will be an exception).
  • Tremendous opportunities abound for well-capitalized investors with the expertise to invest countercyclically in the best submarkets, particularly investors with cash, given the uncertainty regarding future interest rate hikes.
  • Investors should temper their expectations by selecting only well-leased assets and looking for cash flows of 6% to 7%.
  • Given the low mortgage rates, it’s a good time to lock in long-term leverage at cyclical lows, which will help amplify gains as market fundamentals improve.
  • There will be a continued focus on 24-hour markets and global gateways, especially along the coasts with international airports.
  • Infill projects will be favored over fringe locations, in large part due to the trend of echo boomers and baby boomers trading space for a more urbanized environment.
  • Now is a good time to buy land, but only to hold for the right development opportunity down the road.
  • There will be excellent opportunities for lenders and investors to provide both debt and equity to distressed owners hoping to keep their properties.
  • Patience is key - transaction volumes will slowly increase and more distressed deals will appear.
  • Look for industrial and warehouse space to lead the way, followed by the retail sector and then the office sector.

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