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.
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:
- nonfarm payroll employment,
- average hours worked in manufacturing,
- the unemployment rate,
- 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 …
edited by Jodi Summers
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.
There is increased optimism in the Los Angeles office real estate market, especially along the coast, where jobs are being generated at a rate faster than the national average. Experts at the Urban Land Institute expect the current expansion of employment to continue into 2016.
Here’s our good news: the seasonally adjusted unemployment rate in Los Angeles County decreased to 9.2% in December 2013 from the rate of 10.3% one year ago, notes the Employment Development Department. As a point of reference, the California seasonally adjusted unemployment rate was 8.3% in December 2013, down 9.8% from December 2012. Nationally the numbers were 6.7% in December 2013 and 7.8% the year prior.
Increased employment is benefiting the office market. Current Los Angeles market data from Loopnet indicates that the current median price is $315 per sq ft for office properties in Los Angeles. This is an increase of +2.2% compared to the prior 3 months, and an increase of +18.1% compared to last year’s prices.
Developer sentiment in the office space market is optimistic in Southern California due to the increased rate of job growth in the region and a tightening supply of office space.
In January, according to Loopnet, the average asking rental rate per sq ft/year for Office properties in Los Angeles was $24.90, representing an increase of +3.1% year-over-year. County-wide, average rental rates in Los Angeles are +0.8% higher at $23.99 per sq ft/year for Office properties currently for lease.
Nationally, the growing demand for office space, combined with an extended period which has seen little to no new office construction, resulted in the average U.S. office rent to grow 3.1% in 2013 – the first time rents have cracked the 3% annual growth mark since 2007, the peak of the market cycle.
Finally, office investors are cheering the gains in asset values seen in 2013 from a strengthening recovery in the U.S. office market, and looking forward to an even brighter 2014 as virtually all the important metrics that drive rent growth and property income are expected to continue to improve over the next 12 months.
For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – email@example.com or 310.392.1211, and let us move forward together.
You are the green businessman. You’re in solar stocks, net zero options. You are on top of the green world. Now, be on top of the next wave of green trends…
* Global spending on smart energy management services is projected to grow from $291M in 2012 to $1.1 billion by 2020. (Source: Pike Research)
* Solar projects established as a solid asset class attracting traditional Wall Street financiers, crowd-funding to fund small- to medium-sized solar projects, and institutionally-led residential solar lease facilities. REITs will emerge as a potential funding source with the prospect of opening the REIT structure to solar projects.
* Micro-hybrid battery technology that stops a vehicles motor during idling, then starts it again with a battery – not gas – when needed, is coming to the U.S. in a big way with more than eight million vehicles, not including hybrids, to be equipped with this stop-start technology in North America by 2017 (Source: Lux Research). An estimated 35 million vehicles to be produced with this stop-start technology worldwide (Source: Johnson Controls).
* Biomimicry – using designs found in nature as the template for creating modern industrial products and processes – begins to make its mark on clean technology, especially in clean technologies that generate energy from natural sources like the sun and the wind, as well as on the energy-efficiency front, such as energy-saving (and more reliable) screen technologies for devices and the creation of new tougher, lighter and stronger materials.
* U.S. Geothermal industry comes of age in the U.S., with installed cumulative capacity growing to 3,187 MW, which represents more than a quarter of the worldwide total of 11,244 MW.
by Jodi Summers
We meet a lot of inspectors in the day-to-day business of real estate. As we were inspecting a 12,000+ sq.ft. office building with a buyer, it was obvious the property had experienced some significant deferred maintenance. As the inspector was pointing out rust blossoms in the pipes, and homemade electrical upgrades, we got to talking about office building preventative maintenance.
“It’s good for all buildings to have a risk assessment,” the inspector shared. “That way you know what you’re getting, about how long it will last, and it will give you an idea of how much it will cost you.”
A risk assessment usually includes an evaluation the 5 major systems involved in the day-to-day operation of a commercial facility – plumbing, electrical, heating and air conditioning, structure and roofing. Add to that any gear required for business specialization as well as obvious deferred maintenance issues.
A risk assessment examines three aspects of each of the 5 systems:
- Expected useful life left in each system.
2. Maintenance/Repairs that are needed immediately for each system.
3. Total costs that are expected over the next five years for each system.
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