Leasing

Office Leasing – Los Angeles comes in fourth for the highest office rents in the nation behind San Francisco, San Jose and New York, averaging $3.31 PSF. Orange County however is still considered a value for national companies operating out of central business districts. The big announcement in town was the 84,000 SF expansion the UCI Applied Innovation Center in the Irvine Company University Research Park. I’ve been to several functions here and they are up to great things within the university and business community. On the leasing front, we have been finding some softness in both Class A and Class B office properties.

Industrial Leasing – By the numbers, Inland Empire has 22.7 million square feet under construction. Los Angeles’ vacancy rate is hovering around 2.5%. Orange County has the sixth highest industrial average rent in the nation coming in at $1.11 PSF. The biggest block of space available today is JC Penny’s former 1,100,000 SF distribution center in Buena Park which is now available for lease. Even with the breadth of new construction, opportunities to relocate warehouses are sparse and we have been having the most success starting 3-6 months earlier than normal and finding off market opportunities.

Sales / Development

Office Development – The largest new deliver and exciting project is the Irvine Company Discovery Park and Spectrum Terrace. Both projects bring over 1,500,000 SF of Class A office property to the market with about 1/3 completed of the total inventory delivered and 2/3 of the inventory to be constructed and phased in over the coming years. Imagine employers bringing an additional 7,500 employees to the area over the next 2-3 years! These projects include floor to ceiling glass, outdoor meeting area, dedicated conference space, high end dining, and athletic/health oriented amenities. An amazing first class experience for all who located within these projects.

Industrial Sales – The 1,000,000 SF Albertsons distribution center in Irvine next to the El Toro Marine Base is on the market for sale as part of a 45 year sale leaseback. This could turn out to be the largest deal in Orange County this year right here in our backyard. Prologis had the largest purchase this year so far buying over 600,000 SF of new Class A warehouse space in Fullerton and Brea. We are deep enough in the cycle where a lot of the major purchases have taken place by large institutional buyers and we are seeing the delivery of projects after major renovations.

Investment

Wealth Creation Strategies – By investment goal is to help investors purchase commercial properties for their family’s wealth creation and retirement, so that they can be in control of their future. Single tenant net leased investments and multi tenant industrial properties are the properties investors are most focused on at present. These property types present a good mix of long term stable credit and value add investments. Have you looked into cost segregation for your own investment properties? This is the process by which each component of the property is depreciated on its own specific depreciation schedule, as opposed to the entire building being depreciated on one generic depreciation schedule. The results are compelling. This presents an opportunity to be more tax efficient and further invest within real estate.

You can access our National Market Report here, which details the major markets for office, industrial and retail properties across the nation. Find out what is happening in your market.

Let me know when you are ready to discuss your next real estate project. jbsmith@leeirvine.com, 949-790-3151. Looking forward to it! Thank you.

Justin