BuilderBytes' MetroIntelligence Economic Update for 10/24/12

Please click here to see the edition of BuilderBytes for 10/24/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicator:

• Emerging Trends 2013 report suggests real estate recovery to advance in 2013

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Los Angeles Economic Forecast Conference - Commercial Real Estate

Even if you missed the recent Los Angeles Economic Forecast Conference produced by Beacon Economics, you can still get a copy of the conference book for free.  As part of its ongoing association with these economists, MetroIntelligence authored the commercial real estate section for the conference book given out to attendees at this event, which took place on June 21st at the Los Angeles Airport Marriott.

Following are some of the key findings:

• After suffering negative absorption and declining rents from the beginning of 2008 through the middle of 2011, the Los Angeles office market is finally on the mend, with vacancies expected to fall to 12% by the end of 2012 while rent growth slowly rises to 0.8% per quarter.
• With the county’s taxable sales rising by over 7% between the fourth quarters of 2010 and 2011, absorption in the retail sector is gaining strength as vacancies head down towards the 5.0% level; look for positive rent growth to resume in early 2012 and gain strength by the end of the year and into 2013.
• Owing in large part to improvements in global trade through the county’s twin ports, the industrial/warehouse market has been showing mostly positive – if uneven – improvement since the beginning of 2011; look for vacancy rates to approach the 4.0% level by the end of 2012 as rent growth rises to 1.0% per quarter.
• New permits for commercial development rose by 6.5% between the fourth quarters of 2010 and 2011, led by the county’s industrial sector (13.5%) and office sector (4.9%) while permits for new retail stores fell by 4.9%; most of this activity was focused in the Tri-Cities area (i.e., Burbank-Glendale-Pasadena), the South Bay and East L.A./San Gabriel Valley.
• With interest rates for 10-year U.S. Treasury bonds recently falling well below 2%, cap rates during the fourth quarter of 2011 for all commercial property sectors look quite competitive by comparison, ranging from 6.2% for industrial/warehouse properties to over 7.25% for the office and retail sectors.

Click here to download this commercial real estate section.

Click here to download the entire conference book.

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