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

The median price of a new and previously owned homes has dipped  for Los Angeles County.  The year over year change is -10.5%.  This can turn out to be a leading indicator for the industrial real estate market as residential price and sale declines can ripple through the local economy.  Only time will tell.

In November, California led the nation in total exports ($12.8 billion) using the Bureau of Economic Analysis’ (BEA) U.S. Principal Parties of Interest (USPPI) series. Texas had the second highest total export value for the month ($11.7 billion). Year-over-year, California’s total exports increased by +9.7% while Texas’ total exports increased by +5.9%. In the area of manufactured exports, Texas edged out California with $9.6 billion versus $9.0 billion (year-over-year increases of +5.0% and +9.7% respectively). Year-to-date (YTD), total California exports increased by +7.6% (to $117.7 billion) compared with the first eleven months of 2006.

The California Employment Development Department (EDD) released December unemployment estimates last week.  Seasonally adjusted, the Los Angeles County unemployment rate was 5.6%, up from 5.3% in November, from 5.1% in October, and from 4.5% a year earlier.  December was the seventh consecutive month that the County’s unemployment rate increased over the previous year.

Take note, several development projects for industrial condo’s in the greater Los Angeles area have found that in the past year demand for their product has waned. Their marketing strategies have intensified with the goal of selling the remaining units.

The Southern California industrial market continues to generate superlatives — highest rents, lowest vacancies, most construction, greatest absorption — but 2008 looks to a see if not an actual slowdown at least a tapering off in the rate of growth.

One forecaster states “It’s a time to catch our breath and prepare for the next wave. Most industrial developers are welcoming the slowing. The pace has been almost too fast. All this money has been pouring in, and sales and lease activity has been unbelievable. I think most people agree we need a break to catch our breath and assess what the next steps should be. Demand remains solid on both the sales and leasing ends. Cap rates are holding. Rents are holding. It’s more a question of slowing acceleration than deceleration.”

If there is any serious concern about the region’s future, it lies in the possibility of a downturn at the ports of Los Angeles and Long Beach, which account for 40% of U.S. imports.