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DEMAND IS DOWN, BUT MARKET REMAINS TIGHT
Demand was down in the Central Los Angeles industrial market primarily due to weakness in the economy and continued distress in the credit markets. There was a slight up-tick in the overall vacancy rate, which was 3.3% at the end of Q2 2008, up from 3.2% in the previous quarter. Rental rates decreased slightly for the first time in four years, after remaining flat for three quarters in a row. There was also continued downward pressure on sale prices. Premium buildings are still able to command record pricing, but secondary and value-add properties have seen some price reductions. It appears that landlords have begun to reduce rental rates and sale prices to induce reluctant tenants and buyers in an uncertain market.
Construction activity decreased to 799,900 SF, and there are no major developments proposed in Central Los Angeles. Even though market conditions have softened somewhat in the first half of 2008, the market is projected to remain tight for the foreseeable future. Businesses in the area will continue to have problems finding space that meets their exact needs.
Contact Michael Gold at 213.532.3247 for more information.
  INDCLA08Q2.pdf
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