L.A. Area Outlook Is Upbeat

Forecasts about the state of real estate abound at this time of year and the outlook for the Los Angeles area is, as it has been for some time, upbeat.

The authoritative seers expect a continuation of the city’s growth as the nation’s co-financial capital with New York and predict considerable additions of new high-rise office space, while housing, after two big years and despite upward repricing of homes, is headed for another solid year.

For the downside of housing--the affordability factor and the homeless--there is only scattered hope for improvement as prices maintain their costly levels and solutions to the homeless problem progress very, very slowly.

But in commercial realty, near-record activity is anticipated throughout the 1,000-square-mile Los Angeles basin, spurred again by foreign investments, while the remainder of the country is expected to experience a softening in its various major market areas.

Looking back to set the stage for his firm’s annual forecast Tuesday, John G. Russell, president of the western region of Grubb & Ellis Co., notes that since 1980, the basin has added 500,000 jobs and 1 million more people. During that period, it became the nation’s high-tech leader, more than doubled the value of its international trade and doubled its inventory of occupied office space.

The basin or metropolitan area extends from the Orange County line to the south to Ventura County on the north and from the ocean east to the San Gabriel Mountains.

“This performance has been particularly stunning considering that almost all other large metropolitan areas in the industrialized world either declined during this same period or experienced only modest growth,” he said.

Looking ahead to the next two years, Russell and a number of his cohorts see:

--At least 8 million square feet of new office space being absorbed in 1989, a 7% addition to the existing 132 million square feet throughout the basin.

--Vacancy rates rising somewhat this year from the current 15% rate as the new space becomes available.

--Industrial space, in smaller leasable segments, increasing this year among new growth industries throughout the Antelope, Conejo, Santa Clarita and San Gabriel valleys.

Retail development continuing strongly throughout the basin with much replacement and rehabilitation of existing shopping centers.

In 1990, 11.4 million square feet will be completed, with downtown Los Angeles and West Los Angeles accounting for more than 50% of the total.

Russell and his staff cite the basin’s diverse economy, its port facilities, its position in the Pacific realm, increases in its population and its labor force.

How long can this heady pace continue?

While the figures in the future may not be as impressive as they have been, the basin will continue “to be the largest growth market in the nation,” Russell added.

Meanwhile, on the national housing front, information from RE/MAX real estate sources indicates that during the third quarter of 1988, it was tougher--11% longer than the second quarter--to sell the typical resale house.

While it took an average of 92 days nationwide, in California, it took only an average of 38 days to chalk up a sale.