Newport Beach Industrial Inventory is Steady, But Losing Value

While the housing crash has affected industrial properties across Orange County, industrial areas of Newport Beach and other high-end cities have remained quite steady, according to industrial real estate specialist Rob Neal from Hager Pacific Properties.

Neal points to industrial availability, rather than vacancy, as one of the main reasons for the phenomenon. Twice as much commercial space was available last year than two years ago, with the growth of properties remaining at a steady, sustainable rate of around 11%.

Industrial real estate in Newport Beach differs from the rest of the market because it caters to buyers with different needs, Neal added. Retail and office property owners often have less debt and more upfront expenses, particularly in commissions and concessions.

However, he says, property values in the industrial segment have declined by around 30%, with some land values having been slashed to 50%. While they are holding up better than the rest of the market, it may take some time before they recover fully as well.

Neal expects industrial rents to start climbing back up by the end of 2010 or early 2011, although they will remain way below the rates in 2007. He is also expecting lending activity to increase later in the year, as demand is building up in several business sectors.

According to Neal, while a resurgence to 2004-2007 levels isn’t very likely, rent growth will bring the Newport Beach industrial market back in pace with the economy—that is, it will grow alongside the O.C. housing industry and the rest of the economy in the next few years.

 

Earlier in Newport Beach Real Estate News:
Newport Wins Award for Best Beaches
Newport Beach Home On Private Island Hits Market for $28 Million
Old Newport Beach Building To Be Transformed