Industrial and Office:
2009 USC Casden Industrial and Office Forecast
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The annual Casden Real Estate Economics Forecast analyzes economic data, provided by Grubb & Ellis, on rents, vacancies, and transactions for office and industrial markets in Los Angeles, Orange, Riverside and San Bernardino counties. The forecast’s key findings include:
Los Angeles County Forecast
- Continued job losses would cause a continued increase in office vacancies and decrease in rents, with no stabilization until 2012.
- With the nation’s largest port and tightest industrial market, industrial rents are expected to increase by 10.5 percent over the next two years.
- The Inland Empire may enjoy the ripple effect as companies seek less expensive alternatives.
- Los Angeles remains one of the tightest industrial market in the country, with a 3.3 percent vacancy rate. Even with the approximately 250,000 square feet of industrial space currently under construction, rents are expected to rise in the next two quarters.
Orange County Forecast
- Though Orange County added 14,200 jobs, the office market will continue to struggle.
- In 2011, rents are expected to decline more than 12.9 percent for Class A buildings and 10.3 percent for Class B.
- In spite of the area’s overall improvement, the office vacancy rate hovered at 20.7 percent; thus, renters will continue to be able to lock in favorable rates.
- Increased demand for industrial space will cause vacancy rates to fall 2.1 percentage points over the next two years.
Inland Empire Forecast
- The Inland Empire office market will continue to experience moderate increases in vacancy rates and decreases in rents.
- An exception is the Ontario Airport area, which showed 105,000 square feet of positive absorption as companies seek locations near transportation arteries.
- With the affordable pricing, many owner/user entities are now jumping into the market as companies seek to lock in industrial space.
- While over 2.2 million square feet of industrial space came on line last year, the increase in demand for industrial space will push rents a much as 6.6 percent higher.