Los Angeles Hotel and Multifamily Markets Improving, Says Jones Lang LaSalle

LOS ANGELES, CA-- Los Angeles hotels and multifamily are staging a comeback, but other commercial property types are lagging the nation in terms of recovery, according to the latest Jones Lang LaSalle analysis.

As steady job growth re-emerges, demand will pick-up in 2011, but growth will not only be slow, it will be uneven across geography and property types.

The professional services sector will lead the labor market recovery in terms of job growth and will be an important demand driver for both the office and hotel sectors.

 Manufacturing will lag, but rising demand for clean technology and a resurgence in aerospace will bolster Southern California’s manufacturing sector.

 Investment activity remains strong across all property sectors

 Challenges in obtaining traditional financing for small businesses is placing a significant drag on Los Angeles employment

Entertainment, one of Los Angeles’ largest employment subsectors, will add stability to the region’s recovery

Office:  Large space dispositions in the next six-to-twelve months will potentially set the office market back, causing recovery to be uneven and extending the window of opportunity for tenants.

Investment activity targeting well-leased core urban assets is expected to increase.  Office-using employment to show gains in 2011 but the office market will lag economic recovery significantly. 

Downtown CBD will experience decreases in occupancy while ownership may consolidate further.  Tri-Cities will see gains driven by entertainment. 

West Los Angeles leasing to improve, but larger deliveries will place additional pressure on the market.  South Bay will see increase in vacancy due to core defense industry consolidation, but space related business will spur growth.

 Industrial:  With leading industrial indicators pointing towards rental growth in 2011, the pace of investment activity should mirror the second half of 2010. However, the market will remain tenant favorable with vacancy above equilibrium.  Inland Empire experiencing the fastest recovery. 

Retail:  Although retail will continue to lag, increased consumer buying power is expected to lead to greater sales and profits for retailers.

Additionally, renewed demand for store space in malls and shopping centers will further strengthen the retail leasing market and ultimately, the retail investment sales market.  

 Multifamily:  With vacancy low and demand strong, multifamily will experience stable rent growth between 1.0 and 2.0 percent through 2011. Investment levels are also expected to grow as capital rates compress.  Strong net absorption predicted in 2012. 

Hotels:  Lodging demand already marked an unmistakable rebound, posting an 8.8 percent growth rate through November 2010.  Los Angeles hotel market recovery is expected to accelerate in 2011 as hotel operators recuperate pricing power lost during the downturn.

For additional information, please visit
http://www.us.am.joneslanglasalle.com/unitedstates/en-us/pages/los-angeles-property-forecast.aspx?PagePreview=true

 Contact:

David Ebeling, Ebeling Communications, (p) 949.861.8351, (c) 949.278.7851

david@ebelingcomm.com