Southern California Office Real Estate Blog

LOS ANGELES COUNTY OFFICE PROPERTY SNAPSHOT – FEBRUARY 2010

February 4, 2010 on 4:22 pm | In Fascinating Office Real Estate Information, Office Fodder, Statistics, Trends, Uncategorized, all |

SALES ARE ON THE RISE, BUT PRICES ARE WAY DOWN

By Jodi Summers

Chilling words from the Los Angeles Times regarding the Los Angeles area office real estate market, “Industry experts predict properties will have lost 40% to 50% of their value from the peak of mid-2007 by the time the market presumably reboots next year.”

But, not so bad, when you look at the statistics comparing January 2008 vs. January 2010 – in Los Angeles County, median price of sold properties is already down 99%.

Having said that, the landslide drop in prices is triggering activity in the office building sector. Comparing Jan-08 vs. Jan-10: The number of sold properties is up 33%. The 4Q market stimulus which saw the U.S. economy bound up by +5.7% (seasonally adjusted annual rate), according to estimates of the Bureau of Economic Analysis, pushed buyers into the market place. Contrasting Jan-08 vs. Jan-10, the number of under contract properties is up 300%.

“I think the next two years are going to be very tough for the office market,” said Richard Green, director of the Lusk Center and a co-author of the study. “Downtown L.A. is doing a little better than other sub-regions but it’s not immune. You have things like law firms laying people off, so when their lease rolls over they’ll need less space.”

The overall economy has shown signs that the recession may be easing, but that doesn’t hint at an imminent turnaround in office markets, which are considered lagging indicators, Green said.

“It’s the economy, then jobs, then office, in that order,” Green said. “…It’s not until jobs start growing — it’ll be six months after that before the office market picks back up.”

As for the West Side’s office market, Keith Fielding of the Klabin Co. predicted continued price compression and thawing in capital markets. “There’s a lot of money on the sidelines waiting to buy, but prices are not yet where buyers want them.”

Which is why you’ll notice that the number of for sale properties is up 88% from two years ago…and, thankfully, number of sold properties is up 33%. Let us hope the office market will continue to show promise.

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We would like your real estate business. If we can provide you with more detailed information, please contact the SoCal Investment Group through Jodi Summers, Jodi@jodisummers.com. We look forward to working with you in your next real estate transaction.

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