Category Archives: Market Trends & Indicators

Market trends, leading or lagging indicators. As it relates to industrial property.

Market Trends & Indicators

Flat Los Angeles CPI for April

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The Los Angeles MSA (LA-Riverside-OC) Consumer Price Index inched up by +0.1% in April following no change in overall prices in March.  Over the past year, prices in the region have declined by -1.3%.  The chief culprit was falling transportation prices which were primarily driven by plunging energy prices, down by -32.1% since April of last year.  On the other hand, core CPI (less food and energy) prices increased by +1.5% during the same period. [Note:  local consumer price index data are not seasonally adjusted]

The above data is used to calculate the annual rent increases on a typical lease.  Many rent adjustment clauses allow for annual increases to fall within a range, such as 3-6% per annum.  Right now, the annual rate of change is zero according to the above data.

Market Trends & Indicators

Commerce Boardwalk – Replacing Industrial With Retail

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Commerce Boardwalk

Over the past several years, the City of Commerce has been pushing forward with plans to raze a strip of industrial buildings between The Citadel shopping center and The Commerce Casino.  The city’s goal is to replace these warehouse and manufacturing properties with retail development.

Parties that have been involved or have an interest are the following: Costco Wholesale Inc; Nederlander Organization; Majestic Realty; Commerce Hyundai; J.H. Snyder Company; Golden Boy Productions; and Craig Realty.  Costco is currently constructing a new 126.432 square foot retail building on a 12 acre site at 6333 Telgraph Road; the 126,432 square foot store will be a business-to-business prototype, serving the needsof community and business residents.  The store will feature business supplies, a food court, and a 4-bay gasoline station.  This corner location at Telegraph and Washington is the site of the former Firestone building.   Here is a preliminary site plan for the project.

Market Trends & Indicators

SBA Enhances Loan Terms

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Small Business Administration - loans for the purchase of warehouses and industrial properties in los angelesCDC Small Business Finance announced today that all 504 loans approved after February 16, 2009, will be offered with significantly reduced loan fees. The Stimulus Plan completely eliminated the 0.50% SBA Fee charged on the first trust deed bank loan in a 504 loan structure. The plan also reduced the fees associated with the SBA piece of the structure from 2.15% of the loan amount to just 0.625%.

These changes will result in significant savings for commercial real estate buyers looking to finance purchases with SBA 504 loans. For example, consider a $2,000,000 purchase with just 10% down payment in Los Angeles, California. The SBA fees under the old plan would have totaled approximately $5,000 on the bank loan and $17,200 on the SBA loan. With changes announced today, using the same purchase price and down payment, the total SBA fees are reduced to just $5,000 (a savings of $17,200).

The new fee structure is expected to remain in place through the balance of 2009, but there is no guarantee. With respect to interest raters, the current SBA debenture rate is 5.60%. On the bank side, the 5 and 10-year fixed rates are 6.25% and 6.75%, respectively, resulting in a “blended” SBA 504 rate for owner-users of 5.96%.  SBA.

Market Trends & Indicators

CleanTech Manufacturing Center

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Green Industrial Real Estate Development in Los AngelesCleanTech Manufacturing Center is a planned development in Downtown Los Angeles.  The 19-acre tract on which the green industrial belt would be built was just acquired from the state of California for $14 million. Originally owned by Crown Coach, a builder of school buses, the land was supposed to be a site for a state prison, which was never built because of community protests. Thoroughly cleansed of toxics, it is now ready to receive one or more anchor tenants.  The property once laced with toxic contaminants is where city officials hope to build Los Angeles’ future epicenter of clean technology and green jobs.

Market Trends & Indicators

Green Building Program in Los Angeles

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The Green Building Program was approved by the Los Angeles City Council in 2008.

Requirement

  • Meet the intent of the US Green Building Council’s (USGBC) Leadership in Energy and Environmental Design (LEED®) Certified level. (Formal certification by the USGBC is not required.)
  • Project team must include a LEED® Accredited Professional (LEED® AP). Information about local consultants can be obtained at: www.usgbc.org.
  • Both by-right and discretionary projects must receive clearance prior to the issuance of a building permit.

Subject Projects

  • A new non-residential building or structure of 50,000 gross square feet or more of floor area; or
  • A new mixed use or residential building of 50,000 gross square feet or more of floor area in excess of six stories; or
  • The alteration or rehabilitation of 50,000 gross square feet or more of floor area in an existing non-residential building for which construction costs exceed a valuation of 50 percent of the replacement cost of the existing building; or
  • The alteration of at least 50 dwelling units in an existing mixed-use or residential building seven stories or more, which has at least 50,000 gross square feet of floor area, for which construction costs exceed a valuation of 50 percent of the replacement cost of the existing building.

LEED® is comprised of various Rating Systems designed by the USGBC that establish green development standards. The existing Rating Systems include: New Construction (NC), Existing Buildings (EB), Commercial Interiors (CI), Core and Shell (CS) and Homes (H).

Southern California-based Shangri-La Industries and Thompson National Properties are forming a $100 million fund to make buildings more environmentally friendly and energy efficient – a big chunk of money for the growing green building industry. The companies’ $100 million Green Building Fund will be aimed at “value-add commercial and industrial assets that can be retrofitted, repositioned or redeveloped as energy efficient and environmentally sustainable,” according to the companies’ news release.

gas-emissions-by-source- californiaCALIFORNIA GREEN INNOVATION INDEX (2009):  The Index provides insight on a California culture that includes three decades of ambitious state environmental and energy policies, putting California on a path to energy independence and one of the lowest per capita carbon footprints in the nation, all the while growing one of the most vigorous economies in the world.