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Industrial and Office:

2011 USC Casden Industrial & 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

• Unemployment fell 0.7 percentage points to 11.9 percent in 2011
• In 2011, the office vacancy rate fell 0.4 percentage points to 16.6 percent, Class A rents decreased 2.3 percent to $2.94/SF, and Class B rents rose 1 percent to $2.17/SF
• Over the next two years, office vacancies should remain stable while Class A and B rents are expected to decrease 7.7 percent and 7.3 percent, respectively.
• In 2011, L.A. remains the tightest industrial market in the U.S. with vacancy rates falling to 3.1 percent (0.2 point decrease) and rents declining by only a penny to $0.50/SF.
• Over the next two years, industrial vacancies are expected to decrease .4 percentage points to 2.7 percent and rents are expected to increase 9.8 percent to $.55/SF.

Orange County

• Unemployment fell 0.7 percentage points to 11.9 percent in 2011.
• In 2011, the office vacancy rate fell 0.4 percentage points to 16.6 percent, Class A rents decreased 2.3 percent to $2.94/SF, and Class B rents rose 1 percent to $2.17/SF.
• Over the next two years, office vacancies should remain stable while Class A and B rents are expected to decrease 7.7 percent and 7.3 percent, respectively.
• In 2011, L.A. remains the tightest industrial market in the U.S. with vacancy rates falling to 3.1 percent (0.2 point decrease) and rents declining by only a penny to $0.50/SF.
• Over the next two years, industrial vacancies are expected to decrease .4 percentage points to 2.7 percent and rents are expected to increase 9.8 percent to $.55/SF.

Inland Empire

• Unemployment fell 1.1 percentage points to 13.3 percent in 2011.
• In 2011, office vacancy rates remain the highest in the region at 23.8 percent (a 0.1 percentage point decrease) and Class A rents fell by 6.3 percent to $1.92/SF and Class B fell 2 percent to $1.47/SF.
• Over the next two years, Class A rents are expected to decline 4.7 percent, while vacancies should decline 4.3 percentage points to 21 percent. Class B rents are expected to decline 9.6 percent and vacancies are expected to drop 1.6 points.
• In 2011, industrial vacancies fell 4.2 percentage points to 6.6 percent, while rents rose 5.7 percent to $0.33/SF.
• Over the next two years, a 31.2 percent increase in industrial rents is expected to being rents to $0.42/SF, while vacancies are expected to decline by 2.5 percentage points.