Commercial Vacancy Rate Drops, Lease Rates to Go Up
During the first quarter of 2011, the demand for industrial space in Greater Los Angeles grew, reflecting a slight improvement in the economy. Direct vacancy rates dropped from 3.3 percent during the last quarter of 2010 to 3 percent at the end of 2011’s first quarter.
According to the latest “MarketView” report from commercial real estate services firm CB Richard Ellis, the first quarter of 2011 was the fourth consecutive quarter that the market experienced positive growth. Its positive outlook is tempered by the persistent instability of the larger economy, however.
“The general feeling is that the commercial real estate industry is moving past the bottom of the cycle, but the speed with which the economy is improving is slow and inconsistent,” the report said. “As a result, the industry’s fundamentals remain relatively weak and are expected to experience a slow rebound.”
First-quarter lease rates are down 2 cents from the same quarter in 2010, having held steady at 54 cents per square foot since the fourth quarter of 2010. “The asking rate has steadily declined since the first quarter 2008, when the rate was $0.73 per square foot; however, the rate is leveling out as the economic landscape continues to improve.”
As the economy gains steam, lease prices are expected to begin to climb this year. “Average asking lease rates, which have been sluggish over the past few quarters, have appeared to reach bottom and are forecasted to grow at a slow pace during 2011,” the CB Richard Ellis report said.—Erin Barajas
