Q4 2023 Market Trends Newsletter

March 11, 2024

Commercial real estate market conditions across Southern California are mixed, with significant variation across geographic regions and sectors; labor conditions are key to projections for early 2024.

After several quarters of decline in Asian imports, traffic through Southern California ports is trending upwards in early 2024: new agreements with labor unions paired with long waits at the Panama Canal (due to drought conditions) are pushing some to dock in Southern California instead of the Gulf States. But imports are still down about 10% from their abnormal early pandemic highs (mid-2020 to mid-2022), spelling a mediocre 2024 for the industrial sector. In the office market, the Inland Empire maintains the lowest vacancy rate among the nation’s largest 50 office markets, while vacancies in the neighboring LA office sector are nearly three times higher. Inland Empire retail market conditions are cooling off, while LA retail market conditions are fully cooled: in both areas, projections are forecasting flat to mildly unfavorable conditions in 2024. And although performance in the hospitality sector was favorable in 2023, rising labor expenses, hotel worker protection ordinances, and victories for organized labor spell an increasing hourly pay and limiting daily square footage cleaning amounts for 2024.

In the following pages, we outline the major market trends in the Los Angeles and Inland Empire market sectors, along with key indicators. In today’s quickly changing environment, we remain ready to assist you with your commercial real estate valuation needs at any time.

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