“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
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.