What's the demand for L.A. Downtown' industrial building now? Is it better to lease it than to sell it now?

In Market Conditions - Asked by Daniel T. - Aug 5, 2009
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Answer(s)

Paul S.
Broker/Agent
Glendora, CA

Unemployment in California is double digit. The demand for space has declined along with rents and prices. It is quite likely that the price will decline more before it goes up? A lot depends on your time line? Once the Recovery Phase starts it will take a bit of time for prices to go up. Before we start recovery we have to get through the Recession Phase. According to research published at the beginning of 2009 LA was in the last stage of the Expansion phase (top of the market) with the down cycle just about to begin. The vacancy rate at that time was only 3.64%. I suspect that would be much higher today? As an example Boston had a vacancy rate of 19.19% and was in stage 3 of the Recession Phase (at or near the bottom). LA, in stage 3 of the Expansion Phase (top of the curve) still has to travel down through the 3 stages of Hypersupply and 3 stages of Recession to reach the bottom. By now we may be well into the down stages? How long to bottom and recover? Very hard to predict. If you have a lot of time wait. If not sell now before it goes lower. pstoski@yahoo.com
Paul Sylvester,CCIM

Aug 5, 2009
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Paul S.
Broker/Agent
Glendora, CA

As a footnote; view the declining prices as a rolling ball going downhill (down the bell curve) toward the bottom. If you are going to sell, get ahead of the rolling ball with your pricing or you will follow it down. In the short run I don't believe time is on your side. The longer it takes to sell the less you will get until we finally bottom out and start up again.

Aug 5, 2009
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Gregory G.
Broker/Agent
San Francisco, CA

I would trade it into a triple net.
http://www.gregorygarver.com

Sep 1, 2009
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Chris S.
Broker/Agent
Coeur D'alene, ID

Depends on if you are carrying debt and if you can afford to hold.
If I owned it and could hold, I'd lease it for whatever I could get for the next 3 to 5 years and then sell.
If you have to sell today, then check the market for all the current listings and you will need to be at least 25% lower to close a transaction.
Contact the industrial group at CBRE, they have that segment of the market tied up ...

Jan 22, 2010
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Matthew A.
Broker/Agent
Los Angeles, CA

In Central Los Angeles demand is half of what it was a few years ago, so it is soft. To sell or lease is a function of your financial goals. Putting that aside, it would be wise to lease and hold until prices appreciate. Call me to further discuss.

Mar 24, 2010
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