“Broader economic conditions and cargo volumes will continue to have a greater impact on the Los Angeles market, he says. “This market will stay at bottom until improving employment, consumption and trade figures spark a sustained recovery.”

McWilliams says that occupiers will continue to race to take up space in the Inland Empire market, notably in the supply-constrained ‘big box’ sector. “A more cautionary approach will be taken by occupiers in the near-term within the Los Angeles market as their decisions will be more strongly influenced by the prevailing uncertainty in global markets,” he says.

Going forward, McWilliams predicts that “if the recent positive economic indicators pertaining to retails sales and employment are a sign of things to come in 2012, cargo volumes at the port complex of L.A. are expected to reverse the declining trend witnessed in the second half of 2011, fueling demand for industrial space in the infill industrial markets within Los Angeles.”

He also says that if global economic conditions do not provide a shock to capital markets in 2012, institutional buyers will continue to remain active in acquiring underpriced assets that offer potential long-term gains. “Class B assets in port-centric submarkets such as South Bay will continue to draw interest from players such as KTR Capital Partners, CalSTRS and Alere Property Group.”