I attended the LACRA Capital Market Conference and he Market Insight Conference last week. Here are some takeaways.
Asian and Chinese money is prolific and buying up trophy and other commercial properties. These buyers are in for the long haul and use low to no leverage.
Value add loans on 50% occupied large commercial properties carry a rate of 3.5 to 4% interest only, while long term 10 year debt can be locked in at 4 to 4.5% interest rates.
Overall the Los Angeles office market made little progress with vacancies staying flat, while specific markets are surging. Hot markets include the Westside, but also El Segundo has begun to surge due to the growth of local tech companies. In specific sub-markets, brokers are now talking about rent spikes. Even before this expansion develops, one broker frets that the good times may not last. Downtown holds a lot of promise but tech growth has not yet materialized.
Media, tech, advertising, and other creative industries continue to drive the Los Angeles office market recovery. Prosperity is coming to markets with histories of these tenancies. El Segundo, for example, is fraught with bright talent from aerospace . On the Westside– media, tech, and entertainment talent drives the growth. in those markets. Hollywood prospers from its long history with film and music companies. Fashion, art, and architecture will drive Downtown’s office market resurgence.