“The best opportunities are more about repurposing urban areas like the Downtown Los Angeles’ Arts District. New developments won’t be so reliant on cars. The recently passed Measure M in Los Angeles county will fund millions of dollars toward increasing mass transit … Without having to worry about building massive parking lots, more developers will build in spaces once considered a no-go.”
– Larry Kosmont, president and CEO of Kosmont Companies
Hospitality — The robust performance by hospitality will be tested as construction ramps up during 2017, according to Smith Travel Research. JLL reports RevPAR and average daily rate have risen to 3.2 percent year-to-date.
Industrial — Rents are up 8.2 percent, while 12-month net absorption is steady at 2.2 percent with still competitive cap rates holding at 5 percent for industrial properties, according to JLL. The brisk pace for total volumes in 2016 will mark the second largest rally since 2008.
Multifamily — With an occupancy rate of 96.3 percent at the end of 2016, multifamily properties defied predictions of a decline and were up from 95.9 percent occupancy in 2015, according to RealPage. While rent growth slowed compared to 2015, rents still climbed 3.8 percent in 2016, reflecting higher than historical norms.
Office — Rental growth slowed with a vacancy rate of 13 percent in the second half of 2016, according to CBRE. Gradually, the market for tenants grows stronger as the fundamentals for office soften in downtown markets, with the net absorption rates plummeting 46 percent compared to 2015. Technology companies comprise the largest share of office leases at 18.9 percent, followed by financial services at 12.9 percent, and business services at 12.6 percent.
Retail — Food-centered retail has grown explosively — 37.1 percent YoY in the first nine months of 2016, according to Cushman & Wakefield. Fueled by the rise of the foodie movement led by celebrity chefs and championed by millennials, restaurants are multiplying in top tier shopping malls. “No other retail category has generated as much aggressive expansion over the past few years as food-related retail,” says Garrick Brown, vice president of retail research for Americas at C&W.
Article Courtesy of CCIM & CIRE Magazine.