The Heger Report

The Heger Report
FIRST QUARTER
Personal Service. Industrial Expertise.
IN THIS ISSUE
Brokerage
Management
SPRING
Investment
PAGE 2
• Heger Industrial - In The News
• Meet Andrew Recko - Senior Associate
The Heger Company is Now Officially
Heger Industrial.
PAGE 3
• Heger Property Management
Division Delivers Results
• Recently Completed Transactions
Dear Readers,
PAGES 4/5
• Available Listings for Lease & Sale
• Featured Properties
PAGE 6
• Business to Business Featured Company
PAGE 7
• The Legal Corner - Commercial
Mortgage Foreclosures in California
Heger Industrial is proud to be affiliated with
the following organizations either through
individual or corporate involvement.
2011
It is with great pleasure that we announce The Heger Company is now officially Heger Industrial.
The company known for industrial expertise and unparalleled service since 1957 is growing and with
this comes a new name and look.
This initiative is the end result of an extensive effort to solidify our unyielding commitment to the
Los Angeles County industrial real estate market and to lay a foundation for future progress.
This represents the beginning of an exciting new era for our firm. Under the Heger Industrial
name, we look forward to delivering the service, market knowledge and integrity
that has come to define us over the years while continuing to adapt
to the changing industrial real estate market. To learn
more about the many positive changes occurring at
Heger, please visit our new Website at:
www.heger-industrial.com.
We look forward with great enthusiasm to what will be
an incredibly successful year for our company and the
clients we are fortunate to work with! Please contact us
to discuss whatever real estate endeavor you may be
considering.
Sincerely,
Robert G. Thornburgh
President
CCIM, SIOR, CPM
Although Heger Industrial makes every effort to ensure the accuracy
and reliability of the information contained within this report, Heger
makes no guarantee, representation or warranty in regards to the
quality, accuracy or timeliness of the information presented.
Los Angeles Office 5701 S. Eastern Ave. Suite 100 Commerce, CA 90040 Lic. #00814086
Long Beach Office One World Trade Center Suite 800 Long Beach, CA 90831
www.heger-industrial.com
Heger Industrial - In The News
AIR Market Forecast Signals
Positive Industry Trends
The American
Industrial Real
Estate Association
Heger Supports IREM Annual Forecast Breakfast
On Thursday, January 20th, 2011 the Institute of Real Estate Management (IREM) held
its Annual Market Forecast Breakfast at the
Downtown Los Angeles Ritz Carlton Hotel.
Heger Industrial was a Corporate Sponsor
and attendee at the event which featured a
held its Annual
distinguished panel of speakers addressing
Dinner and
relevant industry trends and their potential
Forecasting Event at the Jonathon
impact on our market in the New Year.
Club in downtown Los Angeles
Robert An & Hak Chung Honored as
Top Brokers for 2010
on Wednesday, January 26th.
Heger continued its longstanding
Robert An and Hak Chung were named as Heger's
support of the event and was also
Top Brokerage Team for 2010 at the company's
an attendee which featured a
packed house of the "who's who"
in industrial real estate. The consistent theme presented by the panel
Annual Sales Luncheon. The event was held in
Hak Chung
Los Angeles on Wednesday, February 23rd, 2011.
Robert An
Company Executive and Principal, Tom Holland commented, "The Annual event provides
Heger the opportunity to recognize its salesmen, property management team and
support staff for their extraordinary efforts in the previous year.
of speakers was that the market has
finally reached bottom and that positive trends were forecasted for 2011.
Other individuals recognized included Teresa Ruiz who received the highly distinguished J.W. Heger Award, recognizing her outstanding commitment to the Company.
Century Club Awards were also given to Joseph Wong, James Hilands, SIOR, and Bill
Joseph in recognition of their overall transaction volume.
ANDREW RECKO
Senior Associate
P: 323.727.1144 ext. 129
E: [email protected]
Andrew Recko is a native of Los Angeles where,
after graduating high school, he attended San
Jose State University where he graduated with
a Bachelor of Arts degree in Geography and a
minor in Urban Planning.
Upon graduation, Andrew began his real
estate career in San Jose with The SchmidtPrescott Group working as a commercial real
estate appraiser focusing on the appraisals of
industrial, office, retail, multifamily, and land
PAGE 2
deals. His experience working with all product
types throughout the different markets in the
San Francisco Bay Area gave him the extensive
knowledge required to analyze and value commercial properties while working with two MAI
principals producing reports for lenders, owners,
and attorneys.
A Real Estate Professional with extensive experience in the valuation of commercial properties,
Andrew made a move back to Los Angeles to be
closer to his immediate family and to pursue
property management of multifamily properties
to further his real estate experience. At Property
Management Associates, Inc. he was responsible
for all property management services to clients
and tenants of a regional portfolio spanning from
Los Angeles to Santa Monica.
While maintaining good relationships with owners
and tenants he played an instrumental role in
maintaining tenant retention, leasing services,
coordinating of physical property inspections,
and overseeing of capital improvements.
Andrew later transitioned from management to
pursue his passion for industrial brokerage, joining Heger Industrial, where today, he capitalizes
on his experience, providing his new clients with
the highest levels of service. Andrew is part of
an experienced sales team at Heger Industrial with
his seven years of real estate experience in analysis, operations, marketing, leasing, sales, and
management.
He currently resides in the Silverlake area with
his fiancé and will be married in Malibu later
this Summer.
Q1 SPRING 2011
Property Management
Heger Industrial
Property Management
Division Delivers
Results.
For over 50 years, Heger Industrial has been the recognized leader amongst our industry in the greater Southern California market. During this time, we have served as
a proactive & positive liaison between Landlords and Tenant’s. Our unparalleled experience has taught us that integrity and ethics have and must continue to be the
foundation of our company.
Interested in Property
Management Services?
At Heger Industrial, no management client is too small or too large. Our continued promise is personal attention to your needs. Heger offers performance driven solutions to every
management need grounded through integrity. Backed by years of experience, Heger Industrial understands all facets of the Industrial real estate market.
Industrial has been assisting owners
True Market knowledge translates into understanding more than current lease and sale
evaluations. At Heger, we stay ahead of other important industry trends such as monitoring new accounting standards, local pending legislation, other laws enacted at the state
and national levels, environmental policy changes and variations within construction and
development standards.
All have long lasting implications and directly affect the real estate industry as a whole.
More importantly, they affect you as a property owner, your income stream and the value
of your asset not only today but for the many years to come. Through our long term affiliations with the very best organizations in the real estate industry we provide the very best
in market knowledge and pass these benefits onto our clients.
NOTABLE
COMPLETED
TRANSACTIONS.
Following highlights only a few of
the many transactions completed by
Heger Industrial in recent months.
For a complimentary list of sale and
lease comparables in your area, please
do not hesitate to contact our office:
Q1 SPRING 2011
Multi-Million Dollar Lease
34,133 Square Feet / Office Building
If you have considered looking into
property management services and
do not know where to start, Heger
within Southern California for over 50
years. At present, we are responsible
for over 5 million square feet of commercial and industrial properties.
Growing at a steady and calculated
pace allows us to maintain our focus
on placing clients needs first. For this
reason and more, we continue to gain
new clients time and time again, but
more importantly, we transform these
clients into long lasting relationships.
$1,227,500 Sale
14,400 Square Feet / Industrial Building
5601 E. Slauson Ave., Suite 200 Commerce, CA
Robert S. An and Hak Chung represented the
Lessee in this Lease transaction.
2887-2889 E. Pico Boulevard, Los Angeles, CA
William Joseph represented the Seller in this Sale
transaction.
$1,850,000 Sale
$505,598 Sublease
22,000 Square Feet / Industrial Building
841 E. Artesia Boulevard, Carson, CA
Robert G. Thornburgh and Thomas A. Holland
represented the Seller in this Sale transaction.
$1,290,000 Lease
73,052 Square Feet / Industrial Building
9301 Stewart & Gray Road, Downey, CA
James H. Hilands and Steve Putima represented
the Lessor and Lessee in this Lease transaction.
4,997 Square Feet / Industrial Building
791 S. Mission Rd., Unit A, Los Angeles, CA
William O. Morrison represented the Sublessor
and Sublessee in this Sublease transaction.
$380,001 Lease
14,095 Square Feet / Industrial Building
6099 Malburg Way, Vernon, CA
Jon R. Reno and Thomas A. Holland represented
the Lessee in this Lease transaction.
PAGE 3
Heger Available Properties
Industrial Properties
Location
Size
Sale/Lease
Asking Price
Listing Agent
Ext.
1244 Santa Anita Avenue, South El Monte
560 SF
Lease
6635 E. Florence Avenue, Bell Gardens
840 SF
Lease
$0.89 G
Robert Thornburgh
136
$0.74 G
Thomas Holland
11725 Goldring Road, Unit 3, Arcadia
950 SF
113
Lease
$0.69 G
Jason Vargas
115
11725 Goldring Road, Unit 8, Arcadia
1501-1509 W. 130th St., Gardena
1,000 SF
Lease
$0.69 G
Jason Vargas
115
1,500 SF
Lease
$0.65 G
Elliot Harkness
132
137 S. 8th Avenue, Unit A, La Puente
1,672 SF
Lease/Sale
$0.84 G / $161.18
Joseph Wong
168
1244 Santa Anita Avenue, South El Monte
1,680 SF
Lease
$0.89 G
Robert Thornburgh
136
11725 Goldring Road, Units 5 & 6, Arcadia
2,000 SF
Lease
$0.69 G
Jason Vargas
115
10770 Lower Azusa Road, El Monte
2,000 SF
Lease
$0.60 G
William Morrison
130
10772 Lower Azusa Road, El Monte
2,200 SF
Lease
$0.60 G
William Morrison
130
6635 Florence Avenue, Bell Gardens
2,500 SF
Lease
$0.74 G
Thomas Holland
113
3612-3614 Arden Drive, El Monte
2,654 SF
Lease
$0.55 G
Jason Vargas
115
2409 Strozier Ave., Unit B, South El Monte
2,821 SF
Lease
$0.71 G
Joseph Wong
168
3127 E. South Street, Unit C, Long Beach
2,997 SF
Lease
$0.60 G
Elliot Harkness
132
4178 E. Washington Blvd., Commerce
3,000 SF
Lease
$0.53 G
William Joseph
119
1539-1541 W. Olympic Blvd., Montebello
3,175 SF
Lease/Sale
$0.88 G / $157.48
Joseph Wong
168
2130-2134 Seaman Ave., South El Monte
3,258 SF
Sale
$164.21
Joseph Wong
168
416 E. Banning St., Compton
3,263 SF
Lease
$0.50 G
Elliot Harkness
132
18516 S. Broadway Street, Carson
3,440 SF
Lease
$0.59 G
Jon Reno
117
3219 E. Pico Blvd., Los Angeles
3,600 SF
Lease
$0.59 G
William Joseph
119
5109-5111 E. Olympic Blvd., Los Angeles
3,622 SF
Lease/Sale
$1.00 G / $179.46
Joseph Wong
168
13431 S. Budlong Avenue, Gardena
3,701 SF
Sale
$106.73
Joseph Wong
168
1614 Potrero Ave., Unit B, South El Monte
3,966 SF
Sale
$145.00
Joseph Wong
168
1614 Potrero Ave., Unit E, South El Monte
4,324 SF
Sale
$145.00
Joseph Wong
168
1614 Potrero Ave., Unit F, South El Monte
4,324 SF
Sale
$145.00
Joseph Wong
168
5100 E. Washington Blvd., Commerce
4,332 SF
Lease
$0.35 G
William Morrison
130
1614 Potrero Ave., Unit C, South El Monte
4,533 SF
Sale
$145.00
Joseph Wong
168
1614 Potrero Ave., Unit D, South El Monte
4,533 SF
Sale
$145.00
Joseph Wong
168
1614 Potrero Ave., Unit G, South El Monte
4,567 SF
Sale
$145.00
Joseph Wong
168
13011 S. Broadway, Los Angeles
5,000 SF
Lease
$0.55 G
Robert Thornburgh
136
1614 Potrero Ave., Unit A, South El Monte
5,048 SF
Sale
$145.00
Joseph Wong
168
2930 E. 12th Street, Los Angeles
5,500 SF
Lease/Sale
$1.32 G / $162.73
7105 Paramount Blvd., Pico Rivera
5,560 SF
Lease
$0.36 G
2655 Loma Avenue, South El Monte
5,588 SF
Sale
$156.59
Joseph Wong
168
1409 Santee Street, Los Angeles
5,763 SF
Lease
$1.47 G
Stephan Ktorza
134
William Joseph
119
Hak Chung
142
FEATURED PROPERTIES
9401 Stewart & Gray Rd., Downey, CA
10750 Lower Azusa Rd., El Monte, CA
104,175 & 175,854 Square Feet Available
for Lease, 4 Acre Yard for Trailer Storage
28 Dock High Loading Positions
Contact: Thomas A. Holland
(323) 727-1144 ext. 113
6,236 Square Feet Available for Lease
Ideal Space for Manufacturing
Heavy Power 400 Amps
Contact: William O. Morrison
(323) 727-1144 ext. 130
PAGE 4
1242-1246 Santa Anita Ave.
South El Monte, CA
18,094 Square Feet Multi Tenant Investment
for Sale 3 Separate Buildings – Secure Complex
Planned Retail Development Across Street
Contact: Robert G. Thornburgh
(323) 727-1144 ext. 136
Q1 SPRING 2011
Industrial Properties (Continued)
Location
Size
Sale/Lease
Asking Price
3113 S. Grand Avenue, Los Angeles
5,940 SF
Lease/Sale
$0.99 G / $189.39
10750 Lower Azusa Road, El Monte
6,236 SF
Lease
14980 Hilton Drive, Bldg 5, Fontana
7,140 SF
418 E. Banning Street, Compton
7,636 SF
5770 Anderson Street, Vernon
9,100 SF
1398 Monterey Pass Road, Monterey Park
Listing Agent
Ext.
Stephan Ktorza
134
$0.52 G
William Morrison
130
Sale
$98.04
Robert An
152
Lease
$0.50 G
Elliot Harkness
132
Sale
$137.36
Joseph Wong
168
9,920 SF
Lease
$0.49 G
James Hilands
122
4635 Sheila Street, Commerce
10,292 SF
Lease
$0.59 G
Robert Thornburgh
136
4755 E. 49th Street, Vernon
10,300 SF
Sale
$77.67
Thomas Williams
137
426 E. Banning Street, Compton
10,730 SF
Lease
$0.29 G
Thomas Holland
136
2910 Ross Street, Vernon
12,600 SF
Lease/Sale
$2.38 G / $436.51
Robert Thornburgh
136
4767 E. 49th Street, Vernon
13,131 SF
Sale
$71.97
Thomas Williams
137
1831 W. El Segundo Blvd., Compton
14,750 SF
Lease
$0.29 G
Elliot Harkness
132
2027 Laura Avenue, Huntington Park
15,000 SF
Sale
$110.00
Joseph Wong
168
2140 E. 25th Street, Vernon
15,000 SF
Lease/Sale
$0.50 G / $101.56
Stephan Ktorza
134
8200 Industry Ave., Pico Rivera
15,000 SF
Sublease
$0.48 G
Robert An
152
1800 Tyler Avenue, South El Monte
19,098 SF
Lease/Sale
$0.39 G / $75.00
Joseph Wong
168
4915 Sheila Street, Commerce
22,448 SF
Lease
$0.35 G
Thomas Williams
137
1829 El Segundo Blvd., Compton
23,505 SF
Lease
$0.29 G
Elliot Harkness
132
2430-2438 E. 11th Street, Los Angeles
23,836 SF
Lease/Sale
$0.76 G / $149.00
11540 Wright Road, Lynwood
24,000 SF
Lease
$0.35 G
1365 Obispo Avenue, Long Beach
27,738 SF
Lease/Sale
4019 Medford Street, Los Angeles
27,780 SF
Sale
2140 E. 25th Street, Vernon
3,200 SF
Sale
$101.56
Stephan Ktorza
134
1650 N. Indiana Street, Los Angeles
37,300 SF
Lease
$0.25 G
William Joseph
119
1829-1831 W. El Segundo Blvd., Compton
38,255 SF
Lease
$0.29 G
Elliot Harkness
132
5930 Shull Street, Bell Gardens
40,648 SF
Lease
$0.29 G
Robert Thornburgh
136
4101 Whiteside Street, Los Angeles
43,681 SF
Lease/Sale
$0.21 G / $47.50
William Joseph
119
5930 Shull Street, Bell Gardens
52,413 SF
Lease
$0.29 G
Robert Thornburgh
136
5930 Shull Street, Bell Gardens
93,061 SF
Lease
$0.29 G
Robert Thornburgh
136
9401 Stewart & Gray Road, Downey
104,175 SF
Lease
$0.49 G
Thomas Holland
113
9401 Stewart & Gray Road, Downey
175,854 SF
Lease
$0.49 G
Thomas Holland
113
Robert An
152
Jason Vargas
115
$0.28 G / $78.99
Elliot Harkness
132
$95.00
Joseph Wong
168
Land, Investment, Other Properties
Location
Size
Sale/Lease
Asking Price
Listing Agent
Ext.
727 Turnbull Canyon Road, Industry
16,661 SF
Lease
$0.15 G
Thomas Holland
113
1242-1246 Santa Anita Ave., S. El Monte
18,094 SF
Sale
$99.43
Robert Thornburgh
136
1907 W. 6th Street, Los Angeles
22,250 SF
Sale
$112.36
Thomas Williams
137
2930 E. 12th Street, Los Angeles
29,185 SF
Lease/Sale
$0.25 G / $30.67
William Joseph
119
0 Temple City Blvd., El Monte
117,903 SF
Sale
$22.00
William Morrison
130
722 Parriott Place, Industry
197,326 SF
Lease/Sale
$0.13 G / $18.50
Thomas Holland
113
2140 E. 25th Street, Vernon, CA
5930 Shull Street, Bell Gardens, CA
4915 Sheila Street, Commerce, CA
32,000 Square Feet Available for Sale Ideal
for Manufacturing & Warehousing
Prime Vernon Location
Contact: Stephan M. Ktorza
(323) 727-1144 ext. 134
40,648 / 52,413 / 93,061 Square Feet
Available for Lease (Multiple Units)
Expansive Yard Area, Immediate Access
to 710 Freeway
Contact: Jon R. Reno
(323) 727-1144 ext. 121
22,448 Square Feet Available for Lease
Great Freeway Access, Large Fenced Yard
Contact: Thomas M. Williams
(323) 727-1144 ext. 137
Q1 SPRING 2011
PAGE 5
Business to Business
Business to Business Featured Company –
Stanislawski & Harrison CPAs®
Q. With all the tax law changes in 2010, what changes occurred in
the depreciation rules that will affect your real estate clients?
A. The two most significant changes for our real estate clients were in the areas of Section 179
Alyson Kroischke
Director
This quarter's business to
business feature provided
Heger Industrial the
opportunity to sit down
with Alyson Kroischke,
Director of Stanislawski &
Harrison CPAs to discuss
industry trends.
expense and bonus depreciation. Business and property owners must choose each year whether to
depreciate their business assets over several years or deduct the full cost in the year of purchase as
a Section 179 expense. Last year’s tax legislation both expanded and extended the Section179
expensing limits. For 2010 and 2011, businesses may expense up to $500,000 of qualifying property, with a phaseout threshold of $2 million. Once purchases exceed $2.5 million, Section 179 expensing is not permitted. (For 2012, the Section 179 expense is limited to $125,000 with a
threshold amount of $500,000.) The definition of qualified Section 179 property is temporarily expanded to include certain types of real property (including qualified leasehold improvements),
but the amount is limited to $250,000 for this property.
Bonus depreciation allows businesses to deducted a portion of their qualifying purchases in the
first year, and then depreciate the balance over several years. The bonus amount allowed for
2010 – 2012 depends on when the asset was placed in service. In general, businesses can deduct
50% of the purchase cost in the year the asset is placed service. However, for assets placed in
service from 9/9/2010 through 12/31/2011, businesses can claim 100% bonus depreciation and
deduct the entire cost of these assets in the initial year.
Q. How can your clients maximize the benefits of depreciation for their
real estate investments?
A. The best way to maximize your depreciation deduction is to have a cost segregation study
done on the property. This type of study allows you to identify and separately price the nonstructural items and land improvements from the building. These items have shorter depreciable lives
which allows you to accelerate your depreciation deduction. Landscaping, parking lots, decorative fixtures, cabinets, and security equipment are some examples of assets that may need
proper classification.
Q. What are the new 1099 reporting rules for real estate owners?
A. Starting in 2011, all owners of rental property will be required to report payments for services
provided to that property that exceed $600. This would be the first time that individual taxpayers
owning rental property, who are not "engaged in a trade or business," would be required to provide Forms 1099-MISC. For example, many individuals, who own a vacation property that is rented
part of the year to help defray their costs, may be subject to the new reporting requirements.
A CLOSER LOOK
AT STANISLAWSKI
& HARRISON CPAs
Stanislawski & Harrison is a large
Additional information on Stanislawski &
Pasadena-based CPA firm serving presti-
Harrison can be found on their company
gious clients nationwide, and is listed in
website www.snh-cpa.com.
the top 40 CPA firms in Los Angeles
County by the Los Angeles Business Journal. They specialize in tax, audit, business
management and insourced accounting
services for a wide range of industries,
nonprofit organizations and individuals,
with an emphasis on multi-level family
and business groups.
PAGE 6
Q1 SPRING 2011
The Legal Corner
Commercial Mortgage
Foreclosures in California
State foreclosure law is all derived from
common law principles preventing a
lender from simply taking possession
of one’s property upon a default of a
secured obligation. California law has
added protections for borrowers, including the requirement that exercise of a
lender’s default remedies is only permitted in the event of a material default of
a material obligation under the loan documents. Practically, this prevents lenders
from beginning foreclosure proceedings
for a covenant default, such as breach of
the loan-to-value or debt-coverage ratios. However, a financial default, including failure to pay installments of principal
and/or interest, failure to pay the principal and interest at maturity, failure to pay
taxes, or failure to pay a prior encumbrance, will justify commencement of
default proceedings.
California mortgage lenders are subject
to the “one-action” rule, which prevents
lenders from ignoring real property security and proceeding directly against the
borrower. The choice of the two foreclosure alternatives dictate the respective
rights and obligations of borrower and
lender after the foreclosure sale.
Mr. Alfred M. Clark, III
Partner
Locke Lord Bissell & Liddell, LLP
Nonjudicial foreclosures are begun with the recording of a notice of default, and three
(3) months after the recordation of the notice of default, the trustee prepares a notice
of sale. The notice of sale is recorded, and published in a newspaper of general circulation for 3 consecutive weeks prior to the sale. The borrower, and any person with a
junior recorded lien, has the right (a) to cure the default and prevent the sale by paying
all amounts in default up until 5 business days prior to the scheduled foreclosure sale,
or (b) to redeem the property from the mortgage being foreclosed by paying the obligation in full prior to the sale.
At the nonjudicial sale the foreclosing creditor can credit bid up to the amount of the
secured obligation (including foreclosure costs and attorneys fees) and other bidders
must bid cash to the lien being foreclosed. Title at the sale is conveyed to the foreclosure sale purchaser free and clear of junior liens and continuing interest of the borrower. If the proceeds of the nonjudicial sale don’t pay the loan in full a deficiency
judgment against the debtor is precluded, however a guarantor may be subject to a
deficiency claim. Since the nonjudicial sale is a public auction, it is extremely difficult to
set aside a sale on the basis that the price was low.
A judicial foreclosure requires the filing of a complaint naming all parties with a record
interest in the property. Following a trial on the obligation, the court will issue judgment and order a sale. The judgment creditor obtains a writ of sale, which is delivered
to the marshal, who prepares, publishes and records a notice of sale. Following a judicial foreclosure sale, the borrower has a 90 day right to redeem the property by paying
the amount bid at the sale. If there is a deficiency remaining payable to the lender, the
statutory redemption period extends 12 months after the sale. In connection with the
redemption, debtor is entitled to a “fair value” hearing and if the fair value is determined to be greater than the sales price, the deficiency amount will be reduced to the
difference between the amount of the obligation and the fair value of the property.
In today’s uncertain commercial real estate markets, it is important to keep lenders informed of potential problems that may lead to a default. Informed lenders are often willing to provide temporary relief. Surprised lenders are not usually so accommodating.
Alfred M. Clark, III is a partner in the Los An-
300 S. Grand Avenue, 26th Floor
geles office of Locke Lord Bissell & Liddell,
Los Angeles, CA 90071-3119
LLP, a national law firm with offices in Atlanta,
T (213) 485-1500
Austin, Boston, Chicago, Dallas, Houston,
F (213) 485-1200
London, Los Angeles, New Orleans, New
www.lockelord.com
York, Sacramento and Washington, D.C.
He represents lenders, investors, landowners
and commercial users in a wide variety of real
estate transactions, including workouts of
troubled real estate investments. Mr. Clark
can be contacted as follows:
Q1 SPRING 2011
PAGE 7
5701 S. EASTERN AVENUE SUITE 100
COMMERCE, CA 90040
You can also follow us and market updates
on LinkedIn, Twitter & Facebook.
A B O U T
Brokerage
H E G E R
Management
Investment
Heger Industrial is a full service brokerage
firm with a highly skilled sales and property
management team proudly servicing all of
Southern California. Heger Industrial is also
an Accredited Management Organization
(AMO) and manages over 5 million square
feet of industrial properties. For additional
information on Heger, view our new website
at: www.heger-industrial.com or call us
directly for a private consultation.
Call Heger today for an initial
consultation.
Los Angeles Office
(323) 727-1144
Long Beach Office
(310) 548-3344
2011 INDUSTRIAL REAL ESTATE
MARKET FORECAST
For nearly three years, the industrial market has witnessed declining property values, reduced
lease rates and stagnant activity level. However, the prevailing theory amongst industry experts
is that we have finally hit bottom leading to the next question - what is next?
Business and property owners alike appear prepared to move forward but with cautious optimism. However, any enthusiasm is tempered by the realities of present economic conditions.
High unemployment with limited new jobs being forecasted, modest consumer spending, heavy
debt and scarce financing remain difficult facts to ignore.
It is unlikely that consumers and businesses will return to their pre-recession spending habits in
the near future, something that has had a large impact on port volumes. As demand dropped, so
in turn has the amount of goods passing through the ports. However, in recent months, volume
at the Ports of Los Angeles and Long Beach, has begun to turn around as retailers restocked
their depleted inventories - a very good sign for the industrial sector. In fact, August of 2010 was
T H E
Robert G. Thornburgh
CCIM, SIOR, CPM
President
Thomas A. Holland
CCIM, SIOR, CPM
T E A M
Marjorie F. Davis
the busiest month in the Port of Los Angeles since October, 2006. Approximately 40% percent
of the nation’s imported goods flow through the two Southern California ports.
Past President/Advisor
Another positive note is that investment activity is back and in a major way with an appetite for
Bobbi S. Morrison
the few, quality assets available. Cap rates continue to compress for Class A space, with many
SVP/General Manager
noteworthy deals being acquired in the 6-7% range. This is a trend that will certainly continue
with the major players competing to deploy capital.
EVP/Principal
James H. Hilands, SIOR
Jason K. Vargas
All things considered, the Greater Los Angeles industrial market appears to have come through
Vice President
the storm in a position of relative strength. This has been greatly in part due to a shortage of de-
William O. Morrison
Thomas M. Williams
velopable land. Los Angeles did not experience the overbuilding that occurred in neighboring
William L. Joseph
C. Elliot Harkness
Senior Associate
sult, vacancy rates in the core Los Angeles markets are now beginning to stabilize. Within the
Robert S. An, SIOR
Stephan Ktorza
Greater Los Angeles area, the average vacancy rate remains in the 5-6% range, depending
John Bergstrom
Andrew Recko
Jon R. Reno, CCIM
Eileen Arebalo
Steve Putima
Teresa Ruiz
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Vice President
Senior Associate
Senior Associate
Senior Administrator
Executive Assistant
Joseph Wong
Vivian Ramos Grosh
Hak Chung
Brenna Noltimier
Senior Vice President
Senior Vice President
Controller
Marketing
Hector Ramirez
Facilities Supervisor
PAGE 8
markets such as the Inland Empire which continues to experience double digit vacancy. As a re-
upon the submarket.
Looking ahead, in 2011, we anticipate a mild increase in pricing during the second half of the
year as absorption turns positive and the vacancy rates decrease. Tenants will remain in the driver’s seat with regards to negotiations throughout the year as will strong credit Buyers who are
willing to be patient for the right opportunity.
With its historically strong fundamentals, the Greater Los Angeles area is well positioned to recover more rapidly than other industrial markets around Southern California and the country.
What remains to be seen is how long the market will remain at these depressed levels, and at
what pace the upward growth will occur.
Q1 SPRING 2011