Current Events in the World of Industrial Property

Link: The Winner Is Industrial Real Estate A great article from @izatoak , the President of The Oakstone Company Here in Los Angeles, the home of award shows….Best Performing Real Estate Sector In The Recession… goes to…..envelope please….is Industrial Real Estate….yes we all have experienced rough waters…but we see some blue sky.. and we are all trying to keep a sense of humor as we view the Real Estate Markets. AMB Property Corp. research shows, following eight quarters of negative net absorption, national industrial availability reached a historic high of 13.9% at the end of the fourth...

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‘Zombie Buildings’ May Limit Options for Tenants Tough road if you invested in office within the last 5 years “Now that the values of many properties purchased during the peak of the market have fallen below the balance due on the loan, some landlords are too capital-constrained to offer the tenant improvement allowances and other concessions necessary to attract tenants in today’s marketplace,” said Robert Bach, senior vice president and chief economist.”   Global Viewpoints: ‘Zombie Buildings’ May Limit Options for Tenants

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I was able to tour the Port of Long Beach industrial area yesterday with Blake Tippet from Grubb and Ellis. Blake, thank you for the time and of course lunch at an epic Mexican place (Lucio’s). After recent reports of port traffic being up over 20% from last year in exports and imports, I felt it was a great time to visit the port area and see first hand how the market was responding. In summary, the market is definitely soft with a large amount of vacant buildings and quite a few buildings coming to market in the near future. The few major players in the area have remained active however...

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Link: Los Angeles Ranks Among The Worst Cities for Jobs “No state has suffered a greater reversal of fortunes than California. Five or six years ago California regions generally inhabited the top half or third of our lists. Today they generally have fallen even faster than the other Sunbelt states, even though the state’s economy boasts many assets beyond merely real estate speculation. California now accounts for a remarkable 7 of the bottom 20 regions on our big metro list. The diversity of the disaster spans both the urban centers and the exurbs—witness exurban Riverside-San...

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We would like to thank everyone that has replied and commented on our recent newsletters. The purpose of these newsletters is to bring an opinion to the market and not just reiterate the sea of sameness coming from leading news sources. In response to many of our readers; this week we plan to shed some positive light on the market. Many of us may feel like this gentleman pictured below however now is not the time to grab a cardboard sign. We are seeing positive market data being released and plan on seeing some great buying opportunities coming later this year. There is $1.4 Trillion of debt...

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Great Article by Rueters. The $1.4 Trillion coming due is only going to hurt the market further. We do not expect to see CMBS loans level out for some time. The Market is still trending downward and will continue to do so until the demand can absorb some of the inventory. On a positive note, Port traffic is up along with transactions and some news of job growth. A little good news is always welcome in this sea of bad news. Tue Jan 5, 2010 4:25pm EST http://www.reuters.com/article/idUSN056649220100105 NEW YORK, Jan 5 (Reuters) – The delinquency rate for loans underlying commercial...

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Link: Unemployment: More Than 3 Million Americans Jobless For Longer Than A Year, An All-Time High Unemployment: More Than 3 Million Americans Jobless For Longer Than A Year, An All-Time High (CHARTS) More than three million Americans have been out of work for at least a year, according to a new analysis of unemployment data. That represents 23 percent of the roughly 14.8 million Americans out of work and looking for a job — a post-World War II high. For those 3.4 million Americans, the consequences from such a long time out of work — a cost of the Great Recession — can be calamitous. “[T]he...

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Economy dipped in half of U.S. in last 3 months Article from Huffington Post 4/1/10 (credit Grace Kiser) Despite widespread hints that the recession has ended and a generally rosy outlook for tomorrow’s job numbers, economic activity fell in half of U.S. states over the past three months, according to this great map that Calculated Risk pulled from the Federal Reserve Bank of Philadelphia. In its monthly report, the Philadelphia Fed reported that while the coincident index rose nationally and in 18 states over the quarter, it also dropped off in 25 states. (A coincident index...

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We do not generally answer a question with a question however this is one on the mind of everyone recently. Answer this? Are you a yield or per square foot buyer? Case Study -Class A Industrial Building -756,000 sf, Inland Empire, CA, 50% leased -Purchase Price $35 or Replacement Cost of $55 a foot -Ingoing yield 4% “As Is” -100% Leased Yield 8.6% If you are a price per square foot buyer this building would be cheaper to purchase than to build. If you are a yield buyer, you would be able to acquire a existing class A building 50% occupied with a current 4% yield. Taking into...

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We do not see the market recovering until a few major indicators begin to rise such as jobs, port traffic and more jobs. The economy is going to have a very difficult time recovering without a rise in employment. The latest figure is pointing unemployment around 12% however we feel it is closer to 20%. To Keep it Simple Jobs = spending Jobs = vacancy absorption Jobs = a recovery in the economy A recent article from By Wanfeng Zhou at ABC, NEW YORK (Reuters) – “Consumer confidence rebounded in March, while home prices rose in January for the eighth straight month according to a closely...

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