LOS ANGELES-Due to very strong investor demand and record pricing, “the market for single-tenant net lease properties is incredibly hot right now,” according to Rob Bickel, managing director of capital markets group for Jones Lang LaSalle, during a recent video series produced by the firm that also included commentary from managing director John Strauss.
“This is especially true for assets in infill locations and primary coastal markets,” says Bickel. The Southern California market has historically seen strong investor demand, but Bickel predicts that the market will begin to stabilize in the near term as the result of increased rates that “will negatively affect pricing.”
Bickel's advice: “Sell, sell now. Given the recent instability in the projections for 2013, we think by faraway, the best execution and best pricing will happen this calendar year.”
For those looking to invest new capital, Strauss points to the hotel investment market, particularly the resort space. “The hotel investment market in California is very strong, particularly in Los Angeles and Orange County where there is a deep pool of demand and limited new supply coming online,” he says.
Although the hotel market remains strong, it has started to slow compared with activity in 2012. “It is about a third less of the volume than we had last year, and compared to San Francisco and New York, it is not as liquid a market year-to-date,” says Strauss. Despite the ebb, there are some notable listings on the market, including the London in West Hollywood and the Marriott in Torrance. These listings should “bolster the year end results of overall dollar sales volume.”
Southern California's hotel investment market is one of the top five in the country with high barriers to entry and deep and diversified demand sources. “The result,” Strauss explains, “is a very institutional grade trading market in which hotel investment REITS, private equity funds, core, core plus and value add funds as well as off-shore investors all would like to benefit from the stable and growing underlying fundamentals of the general Southern California economy.”
For further commentary from Strauss and Bickel, watch the full Southern California investment market video series. For more market commentary, read GlobeSt.com's additional stories about JLL's video projects on Los Angeles' office, industrial and retail markets.
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Kelsi Maree Borland
