Investigate California real estate market’s performance in the third quarter of 2016 with Voit Real Estate Services’s indispensable Q3 2016 market reports.
Challenging Market Calls for Tough Decision
Q3 was another in a string of quarters showing a decline in transaction activity, primarily due to a critical shortage of quality space available for lease or sale.
There just isn’t enough quality space to choose from, which is forcing many Orange and LA County businesses to make do with what they have, or move into inferior space to solve short term problems.
Construction of new inventory is essentially non-existent and there is little chance of that changing any time soon. Land is just too scarce and too expensive. So local businesses starving for space can’t look to developers for any help.
Land at $40-$50 per square foot requires rents and sales prices to be substantially higher than their current record high levels to make any sense at all to build. Users of commercial space must choose their next facility from existing stock.
So, if you are a landlord of a quality industrial property, you should be pretty happy. The market has been moving your way for the past several years and probably will keep doing so well into 2017.
Current occupancy levels and sky high prices will also act as a cushion in the event of an economic recession, as vacancy could triple and still be low. That will keep the supply/demand equation from swinging too far in the other direction and force you to lower rates or increase concessions.
If you are currently a tenant and have a lease expiring in the next two years, it’s time to get working on your facilities strategy now.
All options should be on your table for full consideration.
Ideas like renewing your existing lease early, buying your way out of your current lease, splitting your operation into multiple locations or looking in other areas should all be given close scrutiny. We see too many business owners painting themselves into a corner these days by being uninformed and unprepared to make an informed real estate facilities decision.
In 2015, our team made a new commitment to increasing the value we can add for those we serve. We encourage you take a close look at this quarterly synopsis of market activity, paying special attention to the metrics in your immediate area, as the consolidated statistics can be misleading.
ORANGE COUNTY – INDUSTRIAL
This in-depth market report rounds up the performance of the Orange County industrial markets in the third quarter of 2016.
MID-COUNTIES – INDUSTRIAL
Download our fully-illustrated and graphed Q3 2016 report for the mid-counties industrial market via the button below.