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Actual Industrial Real Estate Market Condition Trends - Rent & Sale Comparables

Friday, December 28

2 Actual Market Level Studies based upon Real Estate Appraisal were made, 1 for Market Rent & 1 for Market Sale Price in 2011 vs. 2012 for Year over Year Comparisons, below are approximate results:

Actual Signed & Leased Industrial Rent Comparables (Not Asking for Lease) in 2011: CTU Construction, 9,000 to 17,000 square foot buildings, 1998 to 2002 Year Built – Leased for $.63 to $.75 per square foot of building, NNN equivalent, Average Lease Rate of $.78/SF, NNN – Concessions - Average of 2 Months Free Rent, Average of $0 TI’s or Tenant Improvements with an Average 6 months Marketing Period.      

Actual Signed & Leased Industrial Rent Comparables (Not Asking for Lease) in 2012: CTU Construction, 8,000 to 12,000 square foot buildings, 1998 to 1990 Year Built – Leased for $.56 to $.77 per square foot of building, NNN equivalent, Average Lease Rate of $.66/SF, NNN – Concessions - Average of 2 Months Free Rent, Average of $.09 TI’s or Tenant Improvements with an Average 7 months Marketing Period.

Comparison of Leased Industrial Rent Comparables Rates, Overall for 2011 vs. 2012: Average Rental Rates Substantially Dropped by 18%, Concessions – Free Rent Remained Unchanged, TI’s – Tenant Improvements Increased Very Minimally & # of Months Marketing Period Increased by 1 Month or 17%.

 

Actual Sold Industrial Sale Comparables (Not Asking for Sale) in 2011: CTU Construction, 9,000 to 15,000 square foot buildings, 1988 to 2003 Year Built, Owner User Buyer Motivation not Investment Sale Investor Properties – Sold for $128 to $147 per square foot of building, Average Sale Price of $147/SF, with an Average 13 month Marketing Period.      

Actual Sold Industrial Sale Comparables (Not Asking for Sale) in 2012: CTU Construction, 11,000 to 17,000 square foot buildings, 1991 to 1999 Year Built, Owner User Buyer Motivation not Investment Sale Investor Properties – Sold for $130 to $141 per square foot of building, Average Sale Price of $134/SF, with an Average 13 month Marketing Period.      

Comparison of Sold Sale Comparable Prices, Overall for 2011 vs. 2012: Average Sale Prices Dropped Moderately to 9%, # of Months Marketing Period Increased Very Substantially by 6 Months or 86%.

Based upon the above Analysis, it appears Industrial Market Trends for the Lake Forest Submarket: Very Strong Continued Demand for Owner User Buyer Properties to Purchase relative to Increasing Lesser Demand for Tenants Seeking to Lease Space based on Year over Year Changes in Sale Prices vs. Lease Rates.  Huge Increase in # of Months Marketing Period for Sale Product seems to indicate, Much Less Available Property to Purchase for Owner Users, Very High Relative Demand to Buy since Interest Rates are still at Historic All Time Lows. 

If these Industrial Market Trends Continue, very likely New Industrial Development shall Once Again Occur and New Construction will Commence in Many Submarkets of Southern California.

Similarly, based upon Los Angeles Commercial Real Estate Valuation and other Counties of Orange, Riverside, San Bernardino & Ventura, there is more Demand for Buyers to Become Landlords Compared to Tenants to Lease Commercial Property.


Comments

  1. Colleague_thumb_avatar-brighterdays

    Karen Margrave Reply
    over 1 year ago

    In your post you state that: Based upon the above Analysis, it appears Industrial Market Trends for the Lake Forest Submarket: Very Strong Continued Demand for Owner User Buyer Properties to Purchase relative to Increasing Lesser Demand for Tenants Seeking to Lease Space based on Year over Year Changes in Sale Prices vs. Lease Rates. Huge Increase in # of Months Marketing Period for Sale Product seems to indicate, Much Less Available Property to Purchase for Owner Users, Very High Relative Demand to Buy since Interest Rates are still at Historic All Time Lows.

    As developers in Lake Forest, CA, I am curious as to the specifics of the analysis, it is very encouraging. For instance, what size buildings do you believe there is a demand for by owner/users? Are they general commerical buildings, retail, industrial, etc.?

    Thank you for your post, and time.

    1. No_avatar_colleague_thumb

      Tony Kim Reply
      over 1 year ago

      Subject property consisted of 2 tenants in the 12,000 SF range for market rent comparable analysis and 24,000 SF total for market sale price analysis to an owner user.

      Owner user sale premiums for almost all size ranges of industrial product is typically much higher for industrial vs. general commercial real estate (retail and office) throughout the 6 counties of Southern California.

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Tony Kim

Commercial Real Estate - Market Rent & Market Sale Value - Valuation/Appraisal Advisor
Commercial Real Estate Agent
Los Angeles, California


Website: http://plus.google.com/b/114475168364459929553/114475168364459929553/about
Phone: 323 603 5051

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