Job gains are expected to come slowly in the Greater Los Angeles area during the next few years, with a forecast for just 0.6% employment growth this year and 1.2% increase in 2013.
The biggest gains are expected to be found in entertainment, health care, education, information, and leisure and hospitality—all cornerstones of the Southern California economy.
Meantime, overall tenant demand in the region is modest, though some market areas such as West Los Angeles are experiencing stronger activity anchored by media and technology companies.
Many business owners remain cautious, as the risks to the volatile economic market remain present.
The amount of total vacant space has been on the decline as both direct vacant space and sublease vacant space are considerably lower than the levels from last year. The overall vacancy rate was 17.3% at the end of the second quarter, down compared to last quarter’s rate of 17.7% and 18% at the same time last year.
The average asking lease rate, which has been leveling out during the previous 12 to 18 months, began to have consistent quarter-over-quarter growth. The average asking lease rate increased to $2.42 per square foot during the past three months, a quarterly increase of about 1.7%, while the latest 12-month growth rate was also positive at 3 %.
The area’s industrial market has performed relatively well since the market downturn and economic recession a couple years ago.
Both vacancy and availability rates have fallen from their respective recessionary peaks, while asking lease rates have leveled off and stabilized from its downward trend.
Gross activity in the industrial market during the first two quarters totaled about 11 million square feet per quarter in Greater Los Angeles, more than 1 million square feet higher when compared to the latest three-year and five-year quarterly averages.
Net absorption also increased during the first half of the year, totaling more than 1.7 million square feet during the first quarter and another 1.2 million square feet in the second quarter.
Data and analysis by CBRE Group Inc.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
