Customers always ask me, “How do things look?” Here’s one way to answer. In this roughly one square mile grid of Broadway/Rosecrans, there are about 120 buildings of decent size. I count 25 that have availability. Perhaps not the entire buildings are on the market, but enough to depict this picture. That’s about 20% of the buildings with significant availability. I’m working on a lease in Chatsworth and there is even more yellow. This is a pretty consistent picture throughout Los Angeles. In contrast, there have been times when there is no yellow.
On a transaction level, Landlords need to swallow a lot of pride to make deals. Rents are substantially below what anyone ever anticipated. Tenants are negotiating hard. On the sale side, and this is a surprise, some prices are much higher than one would expect based on rents. The high ceiling, good-loading gem boxes are selling and mostly to Buyers who can take advantage of the cheap dollar. Older manufacturing buildings, like those found here, have not shared in the price recovery to nearly the same degree.
While activity is perking up slightly, it’s spotty and unsteady. In my case, I get a small run going and all of a sudden it’s cold again. Likewise, my broker friends may make a big deal, but then the spigot turns off. Fund activity and build-to-suits are the source of considerable focus, but getting inside those deals are challenging. Finally, there are some great land pieces all across Los Angeles, but it is still the most risky of all categories.
Overall, the picture is very uneven but as we move towards the rest of the year I expect to see less yellow on the map, and hopefully, more green in our pocket.