(Mark Your Calendars: RealShare REAL ESTATE 2012, March 22nd in Los Angeles).
NEWPORT BEACH, CA-“The economic outlook is the best it has been in the last eight years,” according to Christopher Thornberg, a founding principal of Beacon Economics and one of California’s leading economic forecasters. Thornberg served as the keynote speaker, addressing the more than 150 commercial real estate and banking executives that gathered at the Pacific Club in Newport Beach on Thursday for Voit’s Economic Forecast 2012.
Thornberg’s address focused on the factors contributing to his positive outlook for 2012. The positive numbers included the fact that consumer households now have the least debt they’ve had since 1993. “Consumer confidence is a lagging indicator,” Thornberg said. “It is a sentiment, not an economic data report.”
According to Thornberg, “The facts are that consumer delinquencies are plummeting, industrial production is growing, durable orders are rising and imports and exports are reaching parity. In 2011, California had an 8% growth in taxable sales, hotel occupancy increased, exports grew by 30% and employment is up,” he said.
Thornberg added that “While the recession did technically end two years ago, we now have the fundamentals in place that create the setting for the increase we are seeing in the stock market. In 2012, all of you will be happier than you were in 2011.”
As GlobeSt.com exclusively reported last week, Voit’s Orange County numbers are on track with Thornberg’s positive indicators. In the fourth quarter of 2011, the Orange County office market displayed positive net absorption for the sixth consecutive quarter, posting 819,510 square feet—the most occupation of space since the first quarter of 2007, said Voit. According to the fourth quarter market report, activity volume reached its highest level since 2006, and both vacancy and availability decreased from the previous quarter.
At the event, John Harty, who works in Voit’s Irvine office, pointed out that “New office product construction begins when vacancy is between 12% and 13%...In order to get to this lower vacancy from the current 14.97% office vacancy rate, Orange County will need to add approximately 11,000 to 17,000 new jobs.”
In addition, Harty said, “rents need to increase approximately 30% to support new, more expensive construction. The trigger for this is likely to be an office user need that exceeds the size of current space available. Some user will be willing to pay more for their new space, driving up rents in the market, which will encourage additional construction to begin.”
Voit’s Kevin Turner then provided insight on Orange County’s industrial market.
“Orange County’s industrial users average 15 employees, generally requiring an average of 7,600 square feet,” said Turner, who also works in Voit’s Irvine office. “In 2011, 85% of Orange County’s 2,300 transactions were for product under 10,000 square feet. But in 2011, there were actually 50 deals above 50,000 square feet. In the large-space 100,000 square feet-plus, availability is down to just two percent countywide. Based on the decreasing availability, after nine consecutive quarters of rents declining, we experienced our first rental growth in the fourth quarter of 2011. We see that number climbing an additional $.04 in 2012.”
On the industrial sales side, Turner said that “with no available land for new construction, investment opportunities are very strong, but extremely limited.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
