Entries in Leasing Broker (11)

Wednesday
Mar022016

Q2 2015 San Fernando Valley and Ventura County Office and Industrial Market Repor4

Vacancies Fall to Single Digits in Some Submarkets as Rents Rise and Sales Activity Escalates

A strong economic rebound in several industries is escalating leasing activity and rapidly filling office space in select submarkets. Business is particularly strong for media and tech companies, financial companies, especially those that support real estate, and professional services firms including accountants and attorneys. These companies are expanding and creating brisk demand for office real estate.

Vacancies declined by 80 basis points (bps) in 2015 as leasing remained consistently active. The Los Angeles North office market finished the year with a vacancy rate of 13.1 percent, the lowest level since the third quarter of 2008 when vacancies were 12.8 percent.

 Leasing activity for the full year totaled 4,366,248 square feet, with 1,873,763 square feet of gross lease activity occurring in the second half of the year. The activity drove quarterly absorption to the highest levels in 11 quarters. In the fourth quarter, 383,100 square feet of space was leased on a net basis compared with negative absorption of 83,324 square feet in the prior quarter and 270,484 square feet of net leasing in the year ago period.

For the full year, 580,900 square feet of space was absorbed on a net basis, falling short of the 954,500 square feet absorbed in 2014, but more than twice the amount of space absorbed in 2013.

New media and tech tenants in particular are driving office demand in a number of submarkets and pushing vacancy levels down to single digits. Downtown Burbank, with vacancies of 6.4 percent; Universal and Studio City with a vacancy of 7.9 percent, the East Valley with a vacancy rate of 8.5 percent, are among the beneficiaries of the increased demand.

As the market tightens, asking lease rates are rising to their highest levels since the second quarter of 2010. At year end, lease rates averaged $2.35 per square foot, up $0.02 per square foot from the prior quarter and $0.05 versus the year-ago period.

A total of 90 office building sales were transacted in the full year, more unit transactions than in any year since 2005. Sale activity has been limited only by the lack of available product and there continue to be many more buyers than sellers in the marketplace.


Leasing and Absorption Slow as Vacancy Rates Decline to a Historic Low of 1.9 Percent

As expected, leasing activity began to slow in the fourth quarter as industrial space became impossibly hard to find. Just 438,793 square feet of space was leased, compared with 778,854 square feet in the prior quarter, and barely one quarter of the 1,758,015 square feet leased in the comparable year-ago period.

Leasing has not been this slow since the fourth quarter of 2008 in the peak of the recession, but the slowdown is understandable given vacancy levels of 1.9 percent as of the fourth quarter. The tight market is also taking a toll on absorption which declined to 481,100 square feet in Q4 compared to 741,826 square feet in the prior quarter.

The recent announcement that Xebec and Cor­nerstone Real Estate Advisors will be construct­ing two warehouse buildings totaling 361,000 square feet in Sun Valley, was welcome news to this space constrained region, but the new buildings will do little to solve the challenges that most of the businesses in the area are fac­ing.

Average asking lease rates are not showing any statistical increases, but the data is somewhat misleading. In some submarkets such as Bur­bank, warehouse inventory is being taken over for creative office uses at rates considerably higher than the averages. The same is true for newer buildings where deals are being consum­mated at average rates closer to $0.80 - $1.00 per square foot compared to the overall, $0.69 per square foot averages.

The desire by business owners to control costs in this rising rate environment, coupled with the continuing low interest rates, is driving an extremely active sales market for industrial properties and, here too, the statistical mean prices don’t always reflect the real dynamics underway.

Still, even the data suggests that building prices are escalating dramatically. For the full year 2015, 172 sales took place at a median price of $142 per square foot, up 28 percent from pre-recession prices. The fourth quarter saw median prices rise 42 percent to $201 per square foot versus Q3 and 76 percent com­pared to the year-ago period.

Slow Job Growth Puts Ventura County Office Market Behind Its Neighbors

The Ventura County office market continues to make strides toward recovery. At the same time we are still seeing some volatility, and the office sector here is still lagging some neighboring markets.

The office market results reflect findings by economists that job growth in Ventura County has been very lackluster. According to the Center for Economic Research and Forecasting at California Lutheran University in Thousand Oaks, jobs will grow at a meager 1.1 percent for the remainder of the year. The report found that job growth is part of a larger picture of weak population growth related to high housing costs and little new housing construction in Ventura County

Just slightly more than 1 million square feet of space was leased over 2015, about 500,000 square feet less than in 2014, and while Q4 vacancy rates fell 130 basis points (bps) versus Q3, the current 14 percent level still fell short of the comparable year ago period when vacancies registered 13.3 percent.

A total of 252,800 square feet of space was absorbed in the fourth quarter, compared with negative absorption of almost the same amount, 252,770 square feet, in Q3, suggesting that at least some of the activity in the market reflects internal movement, not new leases. For the full year, absorption was negative 49,700 square feet, another indication that leasing activity is being driven by companies relocating within the area.

Nevertheless, lease rates are showing fairly steady increases. Direct asking rates averaged $2.01 per square foot in Q4, a $0.02 increase over Q3 and $0.04 per square foot more than the year-ago period.

As has been the case throughout the year, sales activity is very strong. The median price of buildings sold in the fourth quarter rose 33 percent to $260 per square foot, compared to Q3 and 53 percent versus the year ago period. For the full year, the median price of office buildings sold was $203 per square foot, a 20 percent increase over 2014’s median price of $169 per square foot.

Ventura County’s Industrial Vacancies Decline to 4.3 Percent Restricting Options for Tenants

More than 3 million square feet of industrial space was leased in 2015 pushing a 25 per­cent year-over-year increase in absorption and driving vacancy rates down to their low­est levels since the fourth quarter of 2008.

Although leasing was less active in the fourth quarter than it had been in the rest of the year, the activity throughout the year and par­ticularly in the first half of 2015, was enough to push absorption to 703,600 square feet for the quarter and 1,437,000 square feet for the year. (Leased space is not counted in absorption figures until the tenant moves into the space.)

Just 468,811 square feet of space was leased in the quarter, less than the 546,804 square feet leased in Q3 and a little more than half the space leased in the year-ago pe­riod. Indeed, the majority of the year’s leasing activity, about 2 million square feet, occurred in the first half of 2015. Along with the sharp decline in vacancies to 4.3 percent, the num­bers indicate that many tenants are choosing to remain in place as space becomes harder to find.

Vacancies have fallen nearly 200 basis points from the 6.2 percent registered in Q4 2014, and are just 3.1 percent in the Oxnard submarket, 2.1 percent in Newbury Park/ Thousand Oaks and 2.8 percent in Ventura.

Although average asking lease rates slipped to $0.62 per square foot versus $0.65 per square foot in the prior quarter, a look at ask­ing rents by size range paints a very different picture of the market. While average asking rates for spaces larger than 20,000 SF have decreased, rates for space in the 5,000 – 10,000 square foot range have soared near­ly 12 percent over the past year, and at the close of 2015 averaged $0.85 per square foot.

As with leasing, the sales sector reflects considerable strength in Ventura County’s economy. The median price of industrial buildings sold in Q4 was $115 per square foot, unchanged from the prior quarter and a 22 percent increase over the year-ago period when the median price of buildings sold was $94 per square foot. As is occurring in the leasing sector, sales activity was hampered only by availability.

Lee & Associates Commerical Real Estate Services - LA North/Ventura, Inc.

Thursday
Apr232015

Q1 2015 Office And Industrial Market Report San Fernando Valley

Vacancies Edge Up a Bit While Institutional buyers Drive a 17% Increase in Sales Prices

Office vacancies have remained in the 13 percent range for three straight quarters now, an improvement of 110 basis points (bps) from Q1 2014.

In Q1 2015, the vacancy rate was 13.7 percent, somewhat higher than last quarter’s 13.4 percent vacancy due in part to large chunks of office space that became available. In Sherman Oaks, for example, three spaces totaling 44,484-square-feet became available at 15260 Ventura Blvd., and four spaces totaling about 67,000 square feet including one measuring 25,204 square feet became available at 15301 Ventura Blvd. In Woodland Hills, a 27,694-square-foot space became available at LNR Warner Center and a 17,985-square-foot space became available at The Trillium in Woodland Hills.

Though still in positive territory, absorption slowed to 69,200 square feet, compared to 156,947 square feet in the prior quarter and 87,195 square feet of net leased space in the year-ago period. It should be noted that absorption has remained positive for nearly every quarter over the past three years.

Although not reflected in the data as yet, we have seen a significant uptick in activity recently, and job growth forecasts suggest that vacancy levels and absorption will post more significant improvements as the year progresses. A just-released forecast by Loyola Marymount University and Beacon Economics projects that Los Angeles County will add 75,000 jobs in 2015, amounting to a 1.7 percent rate of growth, just short of the 2 percent growth rate economists described as ‘robust’ last year. The unemployment rate is expected to decline to 7.3 percent by year end.

Sales activity in the quarter was robust, with 18 buildings changing hands including several institutional sales. The activity drove the median sale price up nearly 17 percent to $245 per square foot compared to the prior quarter and 36 percent higher than the year ago period. Among the quarter’s transactions was a Valencia medical office building acquired in a 97-building portfolio deal by Select Income REIT and sold on the same day to Senior Housing Properties Trust. Also among the quarter’s transactions was the sale of the Dreamworks campus in Glendale.

Sales and Prices Skyrocket and Asking Lease Rate Rise as Options for Tenants Shrink

 Industrial sales activity took off like a rocket in Q1. There were 60 industrial buildings sold in the first quarter of the year, more than half the number of buildings sold in all of 2014.

The large number of sales is in part due to a portfolio sale that included 22 San Fernan­do Valley properties, accounting for nearly 37 percent of all the buildings sold in the quarter. Global Logistic Properties Ltd., Sin­gapore, acquired 22 industrial buildings to­taling 651,794 sf in Chatsworth, North Holly­wood and Sun Valley. The Valley transactions were part of a 1,073-building, national port­folio that was sold by The Blackstone Group LP for just over $8 billion. In another of the transactions that took place in the quarter, Ikea acquired 13 industrial buildings total­ing 402,919 sf to build its new mega-store in Burbank.

The Ikea transaction aside – it will effectively remove 400,000 sf of industrial buildings from the Burbank marketplace – the high level of sale activity mirrors what is happen­ing nationally in the industrial real estate market.

Across the country, industrial investments have become a hot commodity pushing up values 17.8 percent over the past 12-month period, more than any other product type, according to Moody’s/RCA. The interest is nearly as strong for industrial properties in suburban markets, the report found.

The institutional transactions in the LA North region pushed the median sale price to $143 per sf in the quarter, up 25 percent com­pared to Q4, 2014 and a 10 percent increase over the median sale price of $130 per sf a year ago.

Vacancy rates fell another 20 basis points (bps) to 2.4 percent, and lease rates rose to $0.69 per sf, $0.02 higher than the prior quarter and an increase of 11 percent over the year-ago period.

Despite the tight market, 333,600 sf of in­dustrial space was absorbed in the quarter, nearly 201,000 more square feet compared to Q4, but well below the 824,385 sf leased on a net basis in the year-ago period.

The lack of available space was more evi­dent in the decline in leasing activity. Just 908,860 sf were leased in the first quarter, a 44 percent decline over Q4 2014 when 1,615,906 sf of industrial space was leased, and 34 percent less than the year ago period when 1,382,803 sf of space was leased.


Wednesday
Feb052014

Q4 San Fernando Valley Office and Industrial Market Report

Vacancies Decline to Lowest Levels in More than Four Years as Leasing Activity Remains Brisk

Office leasing activity spiked again in Q4 to 1,359,421 square feet, the highest levels in the past four quarters. In all, 4.6 million SF of space was leased in 2013, the second straight year of solid activity. (Last year, 5.3 million SF of office space was leased in the region.)  

A total of 272,000 SF of office space was absorbed in the quarter, down 30.5 percent from 391,444 square feet in the prior quarter. For 2013, a total of 241,400 SF of office space was absorbed, also down from 2012 when just over 1 million SF of space was absorbed.  

While there is some evidence that at least a portion of the activity in the market represents tenants trading off one space for another, it is also clear that the market’s inventory of office space is slowly filling up.

Vacancies, which have been trending downward for over a year now, dipped to their lowest levels since Q1 2009. The vacancy rate in Q4 was 16.2 percent, an improvement of 50 basis points over Q3 and 40 basis points over the year-ago period. Vacancies in the Los Angeles North market have declined more than 200 basis points since Q4 2011.

With landlords still facing competition for tenants, we are not seeing the tighter vacancy rates reflected in rental rate growth. Average asking lease rates fell by $0.01 to $2.24 per square foot in Q4, and are up by $0.02 per square foot compared to Q4 2012. It is important to note however, that some submarkets are showing rates well in excess of those levels, and we are seeing variations from one building to the next, even within the same submarket, depending on individual factors impacting each property.

Sales activity picked up dramatically compared to 2012. A total of 49 office buildings were sold in 2013 compared to 2012 when 26 office buildings were sold. The median price of buildings sold in 2013 was $186 per square foot, however, the full-year median sale price was adversely impacted by the first half of the year, and prices have been increasing significantly since then. The median price of buildings sold in Q4 was $255 per square foot, a 12 percent increase over the prior quarter.

Economy at a Glance

INVESTMENT: Record highs in the DJIA index and strong stock market returns along with low inflation and minimal interest rate increases are driving near-record high real estate prices, according to a report in Commercial Real Estate Executive. The story cited $660 PSF paid for the Hollywood & Highland Center in L.A. among others.

RENTS: Brokers polled by National Real Estate Investor expect the national office market to shift in favor of landlords in 2014. On a national basis, the office market has registered occupancy gains for 14 consecutive quarters, vacancy fell to 15.1 percent and lease rates inched up 3.5 percent in the fourth quarter of 2013, CPE reported.

STUDIOS: Warner Bros. topped the worldwide box office in 2013 with $4.95 billion in sales. Walt Disney Co. was second with about $4.68 billion in sales and Universal City was third with $3.68 billion in worldwide sales.

RENEWALS: Companies are using lease renewals as an opportunity to downsize in order to conform to today’s workplace dynamics, National Real Estate Investor reported. The office space utilized per employee is estimated to have fallen to 172 SF from 255 SF in 2000 and estimates are that space used per employee will fall to 145 SF by 2018.

 

Extremely Tight Market Limits Options and Curtails Leasing Activity

Following three very busy quarters that removed a good deal of the industrial inventory from the Los Angeles North market, industrial leasing activity slowed in Q4, declining more than 60 percent compared to Q3 and off 22 percent from the comparable year-ago period.

A total of 943,620 square feet of industrial space was leased in the quarter, compared to 1,539,000 square feet in Q3 and 1,213,000 in the fourth quarter of 2012.

The strong activity that preceded the fourth quarter has brought vacancy rates down and limited options for businesses. Overall, the vacancy rate for the current quarter was 4.1 percent, unchanged from Q3. It is also noteworthy, however, that seven out of the 13 submarkets in the Los Angeles North industrial market finished the year with vacancy rates under 3 percent and vacancies were below 2 percent in several markets.

In Woodland Hills, where much of the industrial inventory has been converted to multifamily use, the industrial vacancy rate is 1.4 percent. Glendale’s vacancy rate is 1.7 percent and the North Hollywood/Universal City submarket has a vacancy rate of 1.9 percent.

Just 23,300 square feet of industrial space was absorbed in the region, compared with 488,300 square feet in Q3 and 551,766 square feet in the year-ago period. Chatsworth experienced the highest absorption rate for the year with 695,000 square feet of industrial space absorbed

With so little space available, asking rents rose to $0.63 per square foot in the quarter, a penny per square foot more than the prior quarter and a $0.03 increase over the year ago period. At $0.63 per square foot, asking rents are the highest they have been since Q3 2007 when the rate averaged $0.75 per square foot.

As the industrial market came back with a vengeance so too did sales activity. There were 86 industrial buildings sold in 2013, the largest volume of sales since 2006 when 118 buildings changed hands.

Median sale prices, however, are still lagging the activity we are seeing. In 2013, the median price of buildings sold was $109 per square foot, off 20 percent from the height of the last real estate cycle when the median industrial building price was $137 per square foot.

Economy at a Glance

GDP: The Commerce Department revised third quarter economic growth to 4.1 percent, the strongest growth in nearly two years, the New York Times reported. Previous estimates were 3.6 percent. The increase was attributed to a rise in healthcare, housing and cars as well as exports, state and local government spending and investment in new factories and inventories.

BENTLEY: A record 10,120 Bentleys were sold last year, the luxury maker’s best performance in its 95-year history, according to a report in Bloomberg Businessweek. Bentley said the stock market run-up fueled some of its sales increases, but the company also rolled out a new, lower priced model at the bargain price of about $200,000.

DEMAND: Industrial demand is expected to remain strong over the next two years, with availability rates nationally falling to 11.1 percent, according to CBRE research reported in GlobeSt. Researchers anticipate that the demand will drive rent growth of 4.4 percent in 2014 and 4.6 percent in 2015.

FILMING: L.A.’s location film production increased 19 percent last year to 6,972 days for features and 11 percent to 18,590 days for television, compared to 2012, the Los Angeles Business Journal reported. Commercial shoots were up 5 percent for the same period. The bad news? L.A.’s feature film production is down 50 percent from peak levels in 1996 and TV production is off 38 percent from its peak in 2008.

Friday
Sep142012

Woodland Hills Office For Lease - Carlton Plaza Office Ground Floor Space Available

Office suite 160 at Carlton Plaza Office in Woodland Hills is now leased. This unique space has an estimated 12 ceilings and large windows allowing natural light to flow into the space. The open floor plan allows for a new tenant to customize their design and build.  Only at Carlton Plaza Office in Woodland Hills is an opportunity like this to have a creative space with high ceiling. The 2,620 RSF space is perfect for any company looking for a custom design with creative features.

Thursday
Mar102011

San Fernando Valley & Conejo Valley Landlords vs Tenants

 

2011 still has its challenges ahead for our economy.  I don't expect things to ease up a bit, but I do think our economy is slowly getting better. Still there is a lot of uncertainty with new and exisiting businesses. This uncertainty with businesses are very appearent in the San Fernando Valley and Conejo Valley and the leasing market reveals this truth.  Long term leases are challenging for majority of new and growing businesses and negotiating lease terms has been no easy ride.

Landlords need some incentives in this market to get their vacancies leased up.  1 month rent abatement per year, 6 month teaser rates, free parking, tenant improvement allowance and an active broker willing to work are some successful elements in this market. In the San Fernando Valley and Conjeo Valley market, there are still too many vacancies to raise rents much further. Creative rent structures is another creative element is consummating a new lease. Its not unusual to see a flat lease for the next few years either. 

Tenants getting closer to lease end have been beginning to tour the market place about a year to six month in advance to see where they can strike a deal. I convey to each tenant that every landlord has a different business model. Whether their model is occupancy percentage, credit tenancy, price per square foot for rent, etc. makes its difficult for some tenants to understand that even though there is vacancy in their local market place, landlords may not necessarily budge where tenants would like. I let each tenant I represent know that the only way to find out where the landlord is will to make a deal is by requesting a lease proposal and negotiating.

Majority of the time, unless specific reasons other than rental price, most tenants will continue to renew their lease. $.10 per square foot isn't really going to make much of a justification to move unless they are a small tenant.  It's typical for tenants to tour the marketplace and to have found themselves back at thier exisiting space renewing their lease for another few more years with some incentives like free rent, new carpet and paint.

For Landlords, it can be very advantagous to consider early lease renewals for tenants. Why? The known is better than the unknown and diminishes the risk of losing a credit worthy tenant. It's easier to control costs like improvements to space, commissions, loss of income for vacancy, and overall real estate costs associated with time. 

But the only really way to know if you had a good lease is only after the lease is over.   

     

Thursday
Mar032011

Lee & Associates - LA North/Ventura Commercial Real Estate San Fernando Valley Business Journal

Uncovering Opportunities and Creating Outstanding Results!

Still a challenging market ahead for 2011, but many commerical real estate investors once on the sidelines in 2009 and 2010 are beginning to re-enter the real estate market and plan to be active this year. 

 http://www.lee-associates.com/global/about-media-article.php?TeamId=6&IdCat=0&id=1609

 

Friday
Feb182011

San Fernando Valley Lee & Associates - LA North/Ventura News

Here we are on Bisnow.

 

http://www.bisnow.com/

Wednesday
Feb022011

San Fernando Valley Office & Industrial 4th Quarter 2010 Market Analysis 

Declines leveling off, some small improvements

Stabilization in office rents are to be expected by 3rd Quarter 2011. Rent Concession, Tenant Improvements, Free Parking and 6 month Teaser Rates are taking over reduced rents.

Q4 2010-LAN Office



Sluggish recovery means little change for industrial market

Leasing activity remains constant while absorption has improved since last quarter.  Still a soft business climate, but the most sales activity continues to come from Owner-Users taking advantage of SBA Financing and low interest rates.

Q4 2010-LA Industrial


San Fernando Valley Industrial Properties Recently Sold

Monday
Nov012010

San Fernando Valley Office & Industrial 3rd Quarter 2010 Market Analysis

Leasing Velocity Remains Steady, But Absorption Weakens

Q3 2010-LAN Office 10-10

Leasing Volume and Sales Prices Rise, Improving Absorption Rates

Q3 2010-LA Industrial 10-10

Friday
Jul092010

San Fernando Valley Office & Industrial 2nd Quarter 2010 Market Analysis

Leasing Activity Jumps; Pushes Absorption Into Positive Territory

Q2 2010-LAN Office 7-10

Leasing Momentum Continues and Sales Activity Increases

Q2 2010-LAN Industrial 7-10

Monday
May032010

San Fernando Valley Office & Industrial 1st Quarter 2010 Market Analysis

Improved Visibility Propels Activity, But Retrenching Still Widespread

Q1 2010-LA Office 4-10

Leasing Activity Continues to Rise as Rents Fall Further

Q1 2010-LA Industrial 4-10