Category Archives: Market Trends & Indicators

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

Redevelopment Boundary Moved South in Arts District

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The Los Angeles City Council last week approved a plan to expand the southern boundary of the Arts District, paving the way for redevelopment of the industrial area between 6th and 7th Streets just west of the river.  This area includes a scattering of modern warehouses amongst mostly older and sometimes multistory brick warehouses built in the 30’s and 40’s.  New residential grown in the current industrial area is expected.  Councilman Huizar proposed the modification to the former boundary set by the Planning Commission and CRA.

Employment Steady with Slight Downtrend

The California Employment Development Department (EDD) released January unemployment estimates last week. Seasonally adjusted, the Los Angeles County unemployment rate was 5.7%, up from 5.4% in December, from 5.3% in November, and from 4.7% a year earlier. January was the eighth consecutive month that the County’s unemployment rate increased over the previous year. Last month’s County unemployment rate was the highest since February 2005 (5.7%). Historically speaking, 5.7% is not high and poses no immediate threat to the industrial real estate market.

Commercial Loan Tightening

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Standards for commercial real estate loans were tightened by a whopping 80% of responding banks. About 46% of banks reported that demand for CRE loans has weakened.

Commercial & industrial loan credit standards and lending terms have been tightened by 32% of banks for large-and mid-size business customers and by 30% of banks for small business clients.  Here also, loan demand has weakened.  The pool of buyers has decreased and thus demand has further decreased.

Intermodal Facilities

Intermodal facility in Los Angeles, land of warehousing and distribution

 

 

 

 

 

Los Angeles has one of the largest and busiest ports in the United States.  Development of intermodal facilities, where shipping containers are transferred between rail and trucks, and adjacent logistics parks is a trend that is being seen across the country. Intermodal container shipments increased 37% in the last 5 years.  The vast majority of goods manufactured in Asia arrive in ports on the west coast.   This trend is changing the face of the bulk distribution sector.  For more information on the Port of Los Angeles.

Industrial Land Use

In recent weeks, dozens of Downtown Los Angeles stakeholders have criticized a plan by the city Planning Department and the Community Redevelopment Agency that would prohibit residential development on approximately 80% of Downtown’s industrial-zoned land.  The Los Angeles Planning Department and CRA last month unveiled a plan for addressing Downtown’s industrial-zoned land. The study, which largely reiterates the findings of planners’ controversial 2006 Industrial Development Policy Initiative, divides Downtown’s industrial-zoned land into four categories.  Most of the property, approximately 80%, falls into Employment Protection Districts, where planners recommend retaining exclusively industrial uses.

The report, which planners released as a staff memo on Jan. 3, is meant to guide the Planning Department and CRA staff on where to approve residential construction and where to oppose it.  Some members of the industrial community also question the boundaries. Frank Gallo, vice president of Downtown’s Rancho Cold Storage, just west of the Los Angeles River between Sixth and Seventh streets, said that an Employment Protection District adjacent to a district with residential development will not deliver any new benefits to industrial users.

“The boundaries should be along major arteries, not secondary streets,” he said. “Define it as a proper industrial area, or define it as residential, and we’ll deal with it. We just don’t want to end up landlocked, and we don’t want to see spot zoning.”

“You need to step back and put it in the proper perspective,” said Jack Kyser, senior vice president and chief economist for the Los Angeles County Economic Development Corp. Noting the current saturated housing market and the strong demand for industrial land, he said that prohibiting residential development in key industrial areas and investing in industrial infrastructure will bring the city new and lucrative industrial development. – excerpts from Los Angeles Downtown News 1/14/08. more information on this subject can be found at blogdowntown