The 12 month trailing average for capitalization rates in Los Angeles County is five and eight-tenths percent (5.8%) for industrial properties. This rate of return is only a few percentage points higher than competing commercial real estate investments such as retail, multifamily and office. Industrial properties remain to be a clear favorite among sophisticated investors.
In the state of California, the Los Angeles area completed $4.5 billion in commercial property transaction volume while the other major regions of California typically range from $.2 to $1.6 B.
The Los Angeles Downtown Industrial District (LADID) covers 44 blocks, a district with boundaries roughly between Third (on the north) and Eighth and Olympic (on the south), San Pedro (on the west) and Alameda (on the east) Streets. Established as a Business Improvement District (BID), this manufacturing and wholesale District is comprised of mostly seafood, fresh and frozen produce, cold storage and other food related services. Over 600 properties lie within the LADID boundaries. It encompasses a 36 block district between Fourth (on the north) and Eighth (on the south) Streets, San Pedro (on the west) and Alameda (on the east) Streets.
The District is the hub of the food chain in Southern California and hosts the Los Angeles Wholesale Produce Market, which has 550,000 sq. ft. on 30 acres. It is the second largest produce market in the United States generating annual revenues of $2 billion. The historic Fisherman’s Outlet is just one of several great restaurants that attract thousands of customers daily. Dozens of garment and printing businesses also thrive in the district.
Of the top 100 nationwide meat companies in terms of sales, the following are from California: Harris Ranch Beef Co; Superior Farms; United Food Group; Bridgford Foods; King Meats Inc; Central Valley Meat Co; White Apron Meats; Don Miguel Mexican Foods Inc; Custom Food Products Inc; and First Class Foods Inc.
These companies deal in bacon, deli meat, fresh and frozen beef, ground beef, ham, hot dogs, pork, prepared foods and sausage. Also noteworthy, the following food companies are largest in the respective category. Oscar mayer – bacon, hot dogs and deli meat. Stouffer’s – prepared dinners. Johnsonville – breakfast sausage. Hormel Black Label – ham.
Other highlights. Consumers continued to gravitate towards kosher dogs such as Hebrew National. Most ground beef goes to burgers. Japan is the #1 buyer of American pork.
A 74,050 square food industrial building on Smithway Street in the City of Commerce sold for $11 Million. A 309,300 square foot warehouse was subleased on Washington Blvd. in the City of Commerce for a total consideration of $8.5 Million. 36,000 square feet of warehouse with freezer and cooler was sold for $5.4 M on Slauson Ave. in the City of Vernon.
The City of Los Angeles has grown again! As of January 1, 2008, the population count equaled 4,045,873 residents. Population growth usually correlates with economic growth and thus bodes well for commercial real estate in Los Angeles such as warehousing and manufacturing properties.
