SOCAL OFFICE REAL ESTATE SNAPSHOT – JUNE 2014 –THE OFFICE PARK OF TODAY IS THE CAMPUS OF TOMORROW

June 1, 2014 on 1:07 pm | In Bravo, Fascinating Information, Investment Opportunities, Market Snapshot, New Developments, Office Fodder, Property Maintenance, Solutions, Trends, Uncategorized, Winning Properties | 2 Comments

by Jodi Summers

Originally built exclusively for business, office parks are evolving into vibrant multipurpose campuses. We all know the office market has been stagnant since the great rise is gas prices and the plummet of the Great Recession. Instead of wallowing in their empty suites, investors and developers from El Segundo to Warner Center are adding value through redevelopment. The result is a re-envisioned business campus where people can dine, shop, and live – all within walking distance of work.

The reinvention of the office complex has had a very positive impact on the lagging office market in 2014. According to Loopnet, office sale prices in metro Los Angeles jumped 12.5% in the first quarter and a total of 17% since 1Q 2013.

The market is finally grabbing how office space needs to be reinvented. Our new generation of young professionals have no interest in working in the same dull McOffice Park that their parents did. So, in addition to reinventing the size and configuration of the workspace, office real estate entrepreneurs are also reconsidering the environment.

To recruit and retain top talent, cutting-edge employers are eager to give millennials a walkable live-work-play-dine environment.

“It’s the new norm,” offers Anjee Solanki, national director of retail services with Colliers International in San Francisco. “People are expecting it.”

The reinvention of the office space is pushing lease rates up. According to Loopnet, average asking rental rate per sq ft/year for Office properties in Los Angeles, CA as of Apr 14 was $25.11. This is an increase of 0.8% compared to the prior 3 months, and an increase of +4.5% year-over-year. County-wide, average rental rates in Los Angeles are +0.9% higher at $24.21 per sq ft/year for Office properties currently for lease, a rise of +3.3% since 1Q 2013.

Want to see fine office retrofit? Check out the 86-acre Times Continental Park in El Segundo. Once and aerospace complex with each building occupied by single large tenants, “we had to rethink what to do with the property,” shares Alex Rose, senior vice president of Continental Development Corp.

Continental Development steadily began retrofitting the buildings to fit multiple tenants. Then it began adding restaurants, shopping, hotels, fitness centers, and a movie theater—all served by a light rail stop. “Once you get the cycle going, it feeds on itself,” Rose says. With 3 million square feet of mixed-use space and an office vacancy rate below 5%, Continental Park found the right strategy to turn things around. “By taking a mixed-use approach, we think we did a good job of listening to our market,” Rose says. “We’ve been able to keep our rents up, keep occupancy up, and attract tenants that perhaps our competition can’t.”

Continental’s approach was so successful, that others wanted in. Invesco Real Estate and SSV Properties of Ontario, subsequently bought four office buildings in Continental Park totaling 540,000 square feet for an undisclosed amount last year. One building was fully leased, but the new owners chose to spend an estimated $75 million to convert the other three to open floor plans that support workplace collaboration.

Continental Park’s mixed-use environment was a key factor in the decision to buy the buildings as a long-term investment,. “The way officing is going right now, folks want the [mixed-use] environment and amenities,” observes Peter Cassiano, director of acquisitions for Invesco.

Many underperforming office parks can’t afford mixed-use makeovers because the owners don’t have the capital. They don’t have the capital because the property is underperforming. The only escape from this Catch-22 is acquisition by new owners with deeper pockets. Looking to get sell an underperforming office park? We have the buyers.

For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

**

http://ww4.hdnux.com/photos/12/14/63/2673915/6/628×471.jpg

http://continentaldevelopment.com/img/continentalpark/continental-park-02.jpg

http://www.socalofficerealestateblog.com/?p=2571

http://www.loopnet.com/Los-Angeles_California_Market-Trends?Trends=SalePricesFS,TotalAvailableForSaleFS,NumberOfListingsFS,TotalNumOfUnitsFS,TotalSFAvailableFS,AskingRentsFL,NumberOfListingsFL,TotalSFAvailableFL&PropertyTypes=Office

http://realtormag.realtor.org/commercial/feature/article/2014/03/welcome-walkable-suburbia

http://www.trbimg.com/img-525f102f/turbine/la-la-me-property-report-jpg-20131016/600/600×349

http://www.nycedc.com/sites/default/files/styles/dynamic_lead/public/images/project/slideshow/Broome%20St.%20Garden%20Rendering.jpg?itok=DCjhhdqI

OFFICE SPACE – MORE PRODUCTIVITY PER SQUARE FOOT

May 15, 2014 on 12:10 am | In Fascinating Information, Market Snapshot, New Developments, Office Fodder, Trends, Uncategorized | 2 Comments

by Jodi Summers

The feeling in the office leasing market is that there is an ongoing trend to get more productivity and efficiency out of office space. It’s on ongoing process of more people being put in less space.

Just as offices are changing, employees are changing as well. Global competition and the increasing role played by computers and other advanced technologies have reduced the need for mid-level workers with no special skills. The elimination of middle management has had some economists to rethinking the assumption that full employment means no more than 4% or 5% joblessness.

Companies are learning to get by with fewer employees while taking up less space per employee as they allow more employees to work at home and squeeze others into denser office layouts.

One of the most dynamic areas for business growth in Los Angeles County is the professional, scientific, and technical services industry – which is currently the fifth largest employment sector in the county. Firms in this industry employ a wide array of professionals, including architects, engineers, and attorneys. It is an important but often overlooked source of highly compensated jobs in the local economy. Industry employment stood at 267,000 in 2012, up 3.5% from a year earlier. Growth is expected to continue in this sector over the next two years, with projected gains of over 9,000 jobs this year and nearly 12,000 jobs next year.

The technology sector, which includes manufacturing and service industries in aerospace, information technology, electronics, and biomedical technology, employed 184,000 workers in 2012, up 2.4% from a year earlier. Like the professional, scientific, and technical services industry, it is a source of highly compensated jobs in the local economy. From January through May of this year, average employment in this sector rose 1.8% and is expected to post modest gains this year and next.

These business areas will expect state-of-the art workspace efficiencies. One local office developer offers that “there will continue to be a relentless pursuit of more efficiency in utilities, quality of mechanical systems, and LEED certification. It is just a matter of time before the same thing happens with LEED that happened with ADA requirements, which used to be voluntary. But now you can’t get a building permit without meeting those criteria. We will migrate toward ‘not a choice anymore,” when it comes to office efficiency.

**

http://articles.latimes.com/2013/dec/16/business/la-fi-economic-outlook-20131216

http://www.uli.org/press-release/2014-emerging-trends-in-real-estate/

http://www.rreef.com

http://www.socalofficerealestateblog.com/?p=2511

http://www.uli.org/wp-content/uploads/ULI-Documents/Emerging-Trends-in-Real-Estate-Americas-2014.pdf http://images.smh.com.au/2013/02/26/4064789/ZAH_hub_LW-20130226215837481767-620×349.jpg http://myturnstone.com/files/kapost/google.jpg https://d26f1zbt4c3e98.cloudfront.net/wp-content/uploads/2013/05/collaborative-work-space.jpg http://hbrblogs.files.wordpress.com/2011/11/richardson_photo1.jpg?w=575&h=383

SOCAL OFFICE REAL ESTATE SNAPSHOT MAY 2014 ~ SPRING RESURECTION

April 30, 2014 on 1:56 pm | In Bravo, Fascinating Information, Market Snapshot, Office Fodder, Statistics, Trends, Uncategorized | 4 Comments

by Jodi Summers

Bravo! The pundits are predicting that the Los Angeles office market will make some headway this year after lollygagging for the previous four years. Even formerly quiet office zip codes like 90025 and 90034 are picking up steam as the Silicon Beach coastal office market of Venice, Santa Monica, Marina del Rey, Mar Vista, Playa Vista and Culver City continues to see shrinking vacancy rates.

Let us look at Marcus & Millichap’s 2014 Market Outlook; it’s full of good news for the Los Angeles Real Estate market for a change.

◆ 2014 National Office Performance Index Rank for Los Angeles is 5 – up 3 places from last year. Our rise is attributed to strong rent gains and high absolute job growth.

The Employment Development Department (EDD) notes that in Los Angeles County, the seasonally adjusted unemployment rate in March was 8.7% – down from the year ago rate of 10.1%.

◆ Employment Forecast: Employers will create 81,000 jobs this year, expanding payrolls by 2.1%. Office-using employment will grow 2.6% as 26,000 positions are generated.

In California, nearly every major private industry sector added jobs over the year: construction; trade, transportation and utilities; information; professional and business services; educational and health services; leisure and hospitality; and other services. Professional and business services posted the largest gain on a numerical basis, adding 88,100 jobs over the year (up 3.8%). Construction increased the number of payroll jobs by 5.9% (adding 37,100 jobs).

◆ Investment Forecast: The potential for rising interest rates and an increase in the number of CMBS loans that are coming due should encourage more buyers to deploy capital in office assets.

As Loopnet notes, Current Los Angeles market trends data indicates an increase of +4.9% in the median asking price per sq ft for Office properties compared to the prior 3 months, with an increase of +12.8% compared to last year’s prices. County-wide, asking prices for Office properties are 4.4% higher at $283 per sq ft compared to the current median price of $321 per sq ft for Office properties in metro L.A.

◆ Vacancy Forecast: Light construction will facilitate a dip in vacancy to 14.2%.

◆ Rent Forecast: After a 3.9% rise in 2013, average full-service rents will climb another 3.9% in 2014 to $30.86 per square foot.

As Loopnet notes, the average asking rental rate per sq ft/year for Office properties in Los Angeles as of Mar 14 was $25.05. This represents an increase of 0.8% compared to the prior 3 months, with an increase of +4.7% year-over-years. County-wide, average rental rates in L.A. County are +1.1% higher at $24.17 per sq ft/year for Office properties currently for lease.

◆ Construction Forecast: Only 550,000 square feet of office space will come online in 2014, down from 1.2 million square feet last year.

For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

**

http://laedc.org/business-assistance/additional-resources/e-edge-newsletter/#1

http://www.marcusmillichap.com/research/researchreports/reports/2014/01/06/los-angeles-apartment-research-report

http://www.loopnet.com/LOS-ANGELES_California_Market-Trends?Trends=AskingPricesFS,SalePricesFS,TotalAvailableForSaleFS,NumberOfListingsFS,ProfileViewsFS,TotalNumOfUnitsFS,TotalSFAvailableFS,DaysOnMarketFS,AskingRentsFL,NumberOfListingsFL,ProfileViewsFL,TotalSFAvailableFL,DaysOnMarketFL&PropertyTypes=Office

SOCAL IS ONE OF THE POWER CENTERS DRIVING THE U.S. ECONOMY

April 17, 2014 on 6:35 pm | In Bravo, Fascinating Information, Funny...Money, Statistics, Uncategorized, World | 3 Comments

edited by Jodi Summers

So-Cal runs from L.A. through San Diego and spills into Tijuana, Mexico, accounting for 21.8 million people and more than one trillion in economic output. Even excluding its Mexican component, its economy is bigger than all of Mexico’s and just a bit smaller than Spain’s, also putting it among the world’s fifteen largest economies.

Above and beyond, the Boston-Washington corridor produces more than Germany, Chicago-Pittsburgh more than Brazil. Add that toSoCal production, which trounces Mexico, and the other regions, and these dozen mega-regions produce more than $13 trillion dollars in economic output, equivalent to three-quarters of America’s total GDP.

**

http://www.theatlanticcities.com/jobs-and-economy/2014/03/dozen-regional-powerhouses-driving-us-economy/8575/

http://www.socalofficerealestateblog.com/?p=2537

OUR ECOMONY IS LOOKING GOOD

April 1, 2014 on 4:46 pm | In Bravo, Fascinating Information, Government, Market Snapshot, Trends, Uncategorized | 4 Comments

edited by Jodi Summers

Optimism is the result of January’s coincident indexes for the 50 states. The coincident index, compiled by the Federal Reserve Bank of Philadelphia, combines four state-level indicators to summarize current economic conditions in a single statistic.

The four state-level variables in each coincident index are:

  1. nonfarm payroll employment,
  2. average hours worked in manufacturing,
  3. the unemployment rate,
  4. and wage and salary disbursements deflated by the consumer price index (U.S. city average).

The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

In January, 49 states had increasing activity(including minor increases). This measure has been and up down over the last few years …

This map was all red during the worst of the recession. Fortunately, it is all green again.

**

http://www.calculatedriskblog.com/2014/03/philly-fed-state-coincident-indexes.html#863cuOCPU41o2Hd6.99

http://www.socalindustrialrealestateblog.com/?p=2127

http://www.socalofficerealestateblog.com/?p=2526

WHERE THE JOBS ARE IN LOS ANGELES

March 15, 2014 on 12:10 am | In Fascinating Information, Investment Opportunities, Lease Rates, Market Snapshot, Office Fodder, Statistics, Trends, Uncategorized | 4 Comments

edited by Jodi Summers

Bravo to us! The Los Angeles County economy will continue to advance on many fronts through 2014. Things we can look forward to this year include:

Population should cross the 10 million threshold this year.

  • Nonfarm jobs in Los Angeles County, which grew by 1.7% in 2013, should grow by 1.3% 2014.
  • Total personal income is also growing; from a 2.1% gain in 2013 to a projected 4.9% increase is projected for 2014.

Experts say it may be 2015 or 2016 before nonfarm employment exceeds the pre-recession peak of 4.12 million reached in 2007…but we’re making fine process.

Here’s how the Los Angeles Times breaks down employment by neighborhood:

South Bay/LAX: In 2012, total core employment in the region grew by 1.7% or 6,900 jobs. In 2013, significant hiring took place in professional and business services (2,700 jobs), leisure and hospitality (1,500 jobs) and construction (1,200 jobs). However, the region’s information sector saw payrolls contract by 1,300 jobs.

LAX passenger traffic increased slightly during the first five months of 2013, rising by 3.7% from the same period a year ago. Domestic passenger travel increased by 5.0%, while international passenger travel increased by 0.3%. Hotel occupancy rates near the airport increased to 88.3% in April 2013 from 83.1% a year ago.

South Los Angeles: Total core employment in South Los Angeles grew by 4.7% or 3,200 jobs in 2012. The recession hit the region hard although core employment is seeing a gradual return to pre-recession levels, gaining 4.7% or 3,200 jobs. Professional and business services grew by 27.9% or 1,500 jobs through 2013. Education and health services contributed 1,300 jobs (9.5%) to core employment.

Westside: Total core employment in the region rose by 3.4% or 11,300 jobs in 2012. The professional and business service sector led employment growth with a gain of 2,800 jobs, followed by leisure and hospitality (2,700 jobs) and information (2,400 jobs). As for travel and tourism, Santa Monica hotel occupancy rates edged up to 86.5% in April 2013 from 85.3% a year ago. Daily room rates continued to grow, increasing 6.0% over the same period.

West Los Angeles office vacancy rates declined during the first quarter of this year compared with 95,000 square feet of new office space is currently under construction.

Yet, office space will fare better than its reputation would lead one to believe. One factor working to the advantage of the sector is that it did not build into oversupply.

**

http://articles.latimes.com/2013/dec/16/business/la-fi-economic-outlook-20131216

http://www.uli.org/press-release/2014-emerging-trends-in-real-estate/

http://www.socalofficerealestateblog.com/?p=2512

http://chooselacounty.com/images/doingbusiness/la-county-map.jpg

http://ridley-thomas.lacounty.gov/wp-content/uploads/2011/11/Screen-shot-2011-11-28-at-12.32.07-PM.png

http://www.rreef.com

http://www.uli.org/wp-content/uploads/ULI-Documents/Emerging-Trends-in-Real-Estate-Americas-2014.pdf

http://www.quickmeme.com/img/3e/3ef91899f1d9fb79d83b37321934852bf1aefa59712fcb35eed3f917702fbd1d.jpg

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