According to the LA Times, Los Angeles is primed for commercial real estate transactions. In fact, as a recent article reported, the city is one of the global market’s top choices for buyers. So who is purchasing commercial buildings in this region? What makes L.A. so attractive to these buyers? We provide these answers for you, below.
Post-Covid Interest in Commercial Buildings Is High
You may think that the Covid-19 pandemic put a major dent in real estate transactions for commercial buildings. But that is not necessarily true. In fact, the CBRE 2021 Americas Investor Intention Survey shows that 70 percent of investors are looking to put their money into real estate this year. That is a 20 percent improvement over 2020.
Unfortunately, only 30 percent of property owners responding to the survey plan to sell 20 percent more property than last year. This means there is a disparity between investors seeking commercial buildings and current owners keeping up with the buying demand.
The LA Business Journal reports improving commercial real estate business conditions in the city as of July 2021. This article references the most recent data from NAIOP, reported within their COVID-19 impact survey.
The NAIOP reports that 86.6 percent of developers are struggling to keep up with construction demands, primarily due to construction supply chain disruptions. These disruptions are the lingering issue in commercial real estate after the pandemic. As a result, construction costs are higher and development timelines very slow.
Because construction is backlogged, it is a great time to buy existing commercial buildings like retail and office spaces. In fact, the NAIOP survey also reports that these types of real estate transactions have doubled over 2020. Industrial transactions are up by 21.1 percent, according to the same source. Warehouse distribution centers are popular among commercial investors, second to office buildings.
Who is buying commercial buildings in Los Angeles?
There are more people than ever breaking into the real estate market in 2021, particularly when it comes to commercial buildings.
These buyers include:
- “Mom and pop” investors building their portfolios
- Large real estate investment trusts (REITs)
- Pension plan companies
- International buyers
- Hedge funds and private equity groups
- Real estate developers
Where Buyers Seek Commercial Buildings
International buyers favor the Los Angeles market for commercial buildings because, in global terms, the market has great deals to offer. Buying properties on the Westside is particularly smart because that area offers high rents and plenty of qualified renters willing to pay them. In fact, the Westside is consistently the highest commercial rent sector in the region.
Downtown Los Angeles and the San Fernando Valley are other hot areas for these buyers, particularly among U.S. developers, as well as Canadian and Chinese investors.
If you are looking for commercial buildings for sale in the San Fernando Valley or other areas in and around Los Angeles, you need an experienced commercial real estate agent. Your agent can help you target properties that most closely match your specific interests or needs. They also help you navigate the transaction process to ensure you get the most property for your investment.