Michael Arnold of Los Angeles is a real estate broker recognized for his achievements by several leading publications and organizations in the industry. In the following article, Michael Arnold discusses the LA commercial real estate market outlook.
As the world was hit by the COVID-19 pandemic, markets of all types were sent into disarray. But perhaps none as much as the commercial real estate sector.
Now the globe is in recovery mode, attempting to recoup lost time and rebuild better than before, including the commercial real estate market. Finally, Michael Arnold of the Los Angeles real estate industry says the landscape seems to be turning around, with experts finding optimism where only pessimism has existed for the past two years.
From high-demand industrial space to graciously low commercial mortgage delinquency rates, the LA scene is set for continued recovery and improvement.
The survey polls panels of California-based commercial real estate professionals in the development and investments markets, all of which said three main driving forces are creating this positive market outlook.
First, the limited number of workers returning to offices has boosted demand for retail units explains Michael Arnold of Los Angeles real estate.
Second, the seemingly constant construction of new residential housing across California has increased demand for nearby retail establishments. And this is only set to continue.
Third, experts believe there will be a push to redesign retail facilities to a more open-air approach in the world's post-COVID climate. In turn, this will attract more consumers and keep commercial real estate flourishing.
Michael Arnold of Los Angeles real estate says that predictions that the net absorption of industrial space will be 401.4 million square feet in 2022 and 334.1 million square feet next year.
This record level of absorption is mainly due to manufacturers and retailers advancing inventories to fulfill heightened demand and prevent supply shortages as the clock ticks through 2023. The United States is moving into expansion from recovery, prompting commercial real estate experts to make this positive correlation.
Currently, Michael Arnold of Los Angeles real estate says that the industrial space demand is outrunning new product supply, encouraging rent spikes and leaving firms left scrambling for units to lease. So much so that large corporations are signing lease agreements on facilities before construction is even underway, and smaller firms are getting creative with vertical expansions on already-owned properties.
But with wage growth continuing and unemployment rates finally leveling, the demand for industrial real estate remains strongly supported. Even though inflationary pressures are well and truly present, consumers are still demanding goods, reflecting continued positivity for the economy and, thus, commercial spaces.
Stable Markets Expected to ContinueMichael Arnold of Los Angeles real estate explains that most (69%) survey respondents say the general market conditions are much or somewhat better than last year's. And over half anticipate continued improvement during 2023.
Michael Arnold of Los Angeles real estate remarks about the findings, reportedly noting that industry leaders are "encouraged" by the ever-decreasing COVID-19 cases, the lifting of pandemic restrictions, and the safe, efficient reopening of city centers.
The five investment groups analyzed by MBA's report make up over 80% of the total commercial/multifamily outstanding debt.
According to the UPB (unpaid principal balance) of loans, the per-group delinquency rates for the final quarter of 2021 were as follows:
