Los Angeles
What We Said
“The city’s retail sector has seriously low
vacancy rates. Marcus & Millichap predicts the retail market will see sustained
rent growth this year, even in a slowing
economy.” — April 2008
What Happened
Retail-vacancy rate (third quarter): 3. 4
percent
■ Rate in second quarter: 3. 4 percent
■ U.S.: 6. 6 percent
In terms of retail, Los Angeles has in fact
played to predictions for the year.
According to CoStar Group, its retail-vacancy rates were stable from the second quarter to the third — comparable
to the 0.1-percent increase nationally. A
similar trend occurred in neighboring
Orange County, Calif. Retail rents in L.A.
also were at $29.88 per square foot for the
third quarter — the fourth-highest nationally, according to CoStar — buoyed
by a 5.7-percent asking-rent increase on
the city’s west side.
Meanwhile, Marcus & Millichap
reported that owners’ revenues have increased 7. 6 percent in the past year.
The next 12 months could tell a different story for all commercial sectors,
however. In July, unemployment in the
L.A. metropolitan statistical area reached
7 percent for the first time since late 2003.
This helped drive asking rents for Class-A
office properties to their deepest dip since
2001, while a trade downturn could stunt
growth of the area’s buoyant industrial-warehouse market.
— Tony Stasiek
What the Locals Say
“When I drive to work [in
Orange County], I’m beginning to see a few more stores
that have gone out of business in little strip centers. It’s
an interesting time. There’s a psychological component to markets, and this one —
in terms of commercial real estate —
hasn’t begun to play out yet.”
— Alex Nackoul, managing director,
Brownstone Mortgage Capital
Washington, D.C.
What We Said
“Market-drivers such as the federal government and major law firms may keep
the region’s vacancy rates, rental rates,
construction and sales performing well
in the foreseeable future.”
— October 2006
What Happened
Office-vacancy rate (second quarter):
7. 8 percent
■ Rate in second quarter 2007: 6. 6 percent
■ Rate in second quarter 2006: 6. 6 percent
Recent attempts by the federal government to rescue financial markets might
soon create a tangential benefit for the
nation’s capital — office-space demand
for growing regulatory agencies.
That’s good news for a city with office-vacancy rates that recently reached
their highest level since the third quarter of 2005, according to Reis Inc. Much
of that empty space centers on NoMa, a
mixed-use neighborhood replacing former
light-industrial and parking space north
of Union Station. The neighborhood’s
second-quarter office vacancy reached
14. 5 percent, according to Grubb & Ellis
Co., but large tenants including the U.S.
Department of Justice plan to fill space as
early as 2010.
The capital’s multifamily market,
meanwhile, remains strong. Apartment
vacancy rates haven’t exceeded 4. 5 percent since the second quarter of 2005.
— Darrick Meneken
What the Locals Say
“Multifamily is much stronger than any other segment.
[Multifamily] lenders are
pretty aggressive still. Vacancy is still very, very low.
Absorption is very high. We’re not giving
up concessions.”
— Ari Firoozabadi, director national
multi-housing group and associate
vice president investments,
Marcus & Millichap
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