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.

Market Trends & Indicators

Large Industrial Property Owner In Distress

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The largest private landowner in downtown Los Angeles said it may have to file for bankruptcy protection, the latest sign of how the credit crunch has frozen a multibillion-dollar revitalization of the city’s downtown.

Large Industrial Warehouse at Alameda St & 7th St in Downtown Los Angeles. One of the first properties purchased by Richard Meruelo. Former Rykoff Food Distribution Warehouse.Real-estate firm Meruelo Maddux Properties Inc. said Thursday that it was working to reach agreements with four lenders after the developer stopped making interest payments on 26 loans valued at $266 million. Three of those loans are due, and the company hasn’t been able to extend them.  “The debt capital markets have totally shut down,” Andrew Murray, the company’s chief financial officer, said in an interview.

It is the latest shoe to drop for Los Angeles’s downtown district, which has been the focus of a decade-long renewal project designed to convert old warehouses and office buildings into lofts, high-rise residential towers and an entertainment and retail district.

Meruelo Maddux, which owns land but has done little development, has reached 50% occupancy on its first luxury rental building, Union Lofts, which opened in mid-2008.   Some of the prominent industrial real estate properties owned by Meruelo Maddux include:  The Overland Terminal on Olympic/Alameda; Sci-ARC on 3rd; Seventh Street Produce Market on 7th; Salvation Army Building at 801 E 7th Street; Rykoff Building now occupied by American Apparel at 7th/Alameda; and the Chaffee Warehouse at Olympic and Alameda.

Meruelo is trying to sell its buildings to pay down debt and to persuade its lenders to restructure loans, but said that if those options fail, a bankruptcy filing could be a “strategic alternative.”

Full article printed in The Wall Street Journal, page A3
Market Trends & Indicators

CMBS Defaults Expected to Increase in 2009

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Of $25.7 billion in distressed assets, the Western U.S. takes $10 billion.  However, the good news is that of all commercial property types in the U.S., Industrial has the lowest distressed amount of $700 million out of $25.7 billion, compared the higher amounts of Office, Retail, Apartment (multi-family), Hotel, and Development.  Industrial includes warehouse and manufacturing buildings.  According to Real Capital Analytics Troubled Asset Radar.

Some of the owners  of the distressed or potentially distressed properties are taking preventative measures and seeking bridge loans prior to their primary loans expire.  Many bridge loan terms max out at 18 months and have interest rates from 10-18%.

Market Trends & Indicators

City of Vernon – Competitive Utility Rates

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Vernon Light and Power Current (Dec 2008) Rates vs. Southern California Edision 2008 rates for electricity and powerThe City of Vernon’s Light and Power Department produces attractive electric rates compared to Southern California Edison. Typically Vernon is 30-40% lower than SCE. Rates vary between small/medium and large power users. The City of Los Angeles DWP also beats SCE in power rates, but typically Vernon is the cheapest.  However, during the power shortage a few years back LA’s DWP was selling power to many neighboring cities and making a huge profit.  SCE and Vernon both produce power and buy it on the free market so they are somewhat vulnerable to fluctuations in the power marketplace.

Additionally, Vernon is 30-60% lower in supplying water given a typical user consuming about 6,000 HCF (hundred cubic feet) of water per month.

Market Trends & Indicators

Lamp Types: Metal Halide, Sodium Vapor, Mercury Vapor, & LED lighting

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When new lamps are installed in industrial warehouse and manufacturing buildings, 4 types of lighting technology are used.

The technology in high intensity discharge (HID) lighting is in some ways similar to fluorescent technology: an arc is established between two electrodes in a gas-filled tube which causes a metallic vapor to produce radiant energy. In this case, however, a combination of factors shifts the wavelength of much of this energy to within the visible range, so light is produced without any phosphors. In addition, the electrodes are only a few inches apart (at opposite ends of a sealed “arc tube”) and the gases in the tube are highly pressurized. This allows the arc to generate extremely high temperatures, causing metallic elements within the gas atmosphere to vaporize and release large amounts of visible radiant energy. There are three main types of HID lamps: mercury vapor, metal halide and sodium. The names refer to the elements that are added to the gases in the arc stream which cause each type to have somewhat different color characteristics and overall lamp efficiency.

Ballasts and Warm-Up Time: Like any gaseous discharge light source, HID lamps have special electrical requirements that must be supplied by a ballast. With HID sources, however, the ballast must be specifically designed for the lamp type and wattage being used. In addition, HID lamps require a warm-up period to achieve full light output. Even a momentary loss of power can cause the system to restrike and have to warm up again—a process that can take several minutes. In applications where constant illumination is important for safety and security, a backup system is often required.

Metal Halide Lamps:  Metal halide lamps are among the most energy efficient sources of white light available today. These lamps feature special chemical compounds known as “halides” that produce light in most regions of the spectrum. They offer high efficacy, excellent color rendition, long service life and good lumen maintenance. Because of their numerous advantages, metal halide lamps are used extensively in outdoor applications and in commercial interiors.

Sodium Lamps:  High-pressure sodium sources were developed primarily for their energy efficiency. Mercury and sodium vapors in the ceramic arc tube produce a yellow/orange light with extremely high LPW performance and exceptionally long service life (up to 40,000 hours). High-pressure sodium lamps render colors poorly, which tends to limit their use to outdoor and industrial applications where high efficacy and long life are priorities.  Since these lamps produce light at only one wavelength in the yellow region of the spectrum, they are used where energy efficiency and long life are the only requirements.

Mercury Vapor Lamps:  Mercury vapor lighting is the oldest HID technology. The mercury arc produces a bluish light that renders colors poorly. Therefore, most mercury vapor lamps have a phosphor coating that alters the color temperature and improves color rendering to some extent. Other HID types that offer higher LPW and better color properties have largely superceded the use of this lamp.

LED Lighting: Lighting fixtures using LEDs are the most energy-efficient and versatile solution for lighting your warehouse. Their energy consumption is lower than that of any other light source, yet their Lumen output is comparable or superior.