February 20, 2014 Meissner

Outlook Positive for Real Estate Financing

The national trend towards economic health is creating new opportunities for lucrative investment in office and industrial space throughout the state of California.  U.S. exports via the Sunshine State ports are on the rise and companies are once again thinking about expansion. The likelihood that investing in and financing industrial properties will pay off to the good is also bolstered by a corresponding economic wellness in the Eurozone, Japan, and China.  It is clear that the demand for warehousing space in southern California port cities will increase as the volume of trade increases.

In fact, the industrial and distribution sector is leading the way in both investment and development forecasts in 2014, according to the Urban Land Institute (Emerging Trends in Real Estate 2014). Experts anticipate that the growth in this sector will rise almost as high as the superstar apartment sector did last year.

“If you are a long-term investor, the industrial sector just keeps doing well, even if it’s not glamorous,” commented an industrial real estate investor in the ULI report.

According to The Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey and Index Research Project, nationally:

  • Office occupancies are forecast to improve 0.2% in 3Q14, with rents improving 0.7% quarter-over-quarter.
  • Industrial occupancies are forecast to improve 0.1% in 3Q14, with rents improving 0.7% quarter-over-quarter.

In the ULI survey, San Diego sits as #15 on the “U.S. Markets to Watch” list with a projected investment increase of 6.47% dovetailed nicely with a projected development increase of 5.91% and homebuilding upsurge of 6.71%.

Bottom line, investing in or financing commercial real estate—especially industrial real estate—is increasingly seen as a smart move, rather than a risk.

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