CPN - September 2008 - (Page 14) MARKET INTELLIGENCE LOS ANGELES that are closer to ports more attractive, Snyder noted. Still, vacancy remains tight, at 2 percent as of the end of the second quarter, according to CB Richard Ellis Inc. Even if demand slows, land constraints should keep supply in check. Unless, that is, zoning changes the landscape. “In the residential frenzy, there was a lot of industrial land that was rezoned for residential,” said Voit Development Co. vice president of development and acquisition Tim Regan. “I see that coming back as industrial.” Similar caution has crept into the office market. Landlords, for example, are trying to increase lead time for lease renewals.“Landlords were waiting until the year before a tenant’s lease was up to start negotiations,” said Colliers International senior vice president Richard Schnell. Now, he said, landlords are opening discussions about leases that expire in 2011 or 2012. David Simon, managing director & head of Southern California operations for Broadreach Capital Partners, which owns 1 million square feet of office space in Los Angeles County, stated, “You have to be proactive and get ahead of tenants on renewals. Large tenants now have more leverage.” Delores Conway, director of the Casden Real Estate Economics Forecast for the University of Southern California’s Lusk Center for Real Estate, expects vacancy to rise and rents to ease, especially in the San Fernando Valley. Indeed, the banking crisis will negatively affect the area. Industry professionals expect Countrywide Financial, headquartered in Calabasas, to reduce its office space significantly. Bank of America Corp. bought the company in January, and announced that it London Amsterdam Investors Still Love L.A. As in other major markets, investment sales volume is down in Los Angeles, and office pricing has fallen 10 to 15 percent from April 2007, said David Doupe, international director for Jones Lang LaSalle Inc.’s Americas division. But while the credit crunch has curbed investment, Doupe tells clients that if they have an asset priced in the $50 million range, it could be a good time to sell, as buyers are looking for assets and many lenders will offer financing on deals of that size. AMB Property Corp., owner of 8.3 million square feet of industrial space in Los Angeles County’s South Bay submarket, is seeking redevelopment opportunities in the area, which sits near the ports of Los Angeles and Long Beach. “We look to buy older properties and bring them up to the B-plus, A-minus level,” said Kim Snyder, senior vice president & managing director of the Southwest region for the firm. David Simon, managing partner & head of Southern California operations for Broadreach Capital Partners, said 2009 and 2010 should present opportunities to buy distressed office assets. “For value-add buyers, which we are, there should be opportunities. The newcomers are going to be flushed out.” Investment Team members Gino Sabatini, Katie Barthmaier and Zack Pack on-site at International Aluminum Corporation A constant source of capital in a constantly changing market Best Brands Corporation CA, KS, MN, TX Mantsinen Group Finland Schoeller Arca Systems France Germany $50,800,000 March 2008 $18,000,000 April 2008 $29,900,000 March and June 2008 Actebis AG Germany Laureate Education, Inc IL Wagon plc Germany $69,400,000 July 2008 $29,400,000 July 2008 58,000,000 August 2008 and results-driven financing structures for leveraged buyouts, acquisitions and recapitalizations. realize the capital tied up in their real estate assets in all market conditions. For more information about W. P. Carey, please contact: 14 Commercial Property News • September 2008 • www.cpnonline.com http://www.wpcarey.com http://www.wpcarey.com http://www.cpnonline.com
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