Latest Commercial Real Estate Market News & Investment Advice in Los Angeles

Small Loans Ticked Up Appreciably During 4th Quarter Of 2014

December, 2014
by Karl Niehaus, President, CREI

Commercial Overview:

COMMERCIAL PROPERTIES ADVANCE TO 2007 PEAK, with pricing for retail properties are now within 11.4% of its previous high. The Retail Index rose 15% over the 12-month period, the strongest annual gain among the four major property types, according to the CCRSI. Overall industrial and office property prices are within 14.4% and 21.2% of their previous highs, respectively, while pricing in the multifamily sector, is now 1% above its previous peak. The retail market continues to change though with national tenants not looking for new locations as they were in the past. Many operators, such as Borders, have shut down, or in the case of Best Buy, are downsizing. Aside from your largest retailers such as Walmart and Target, all other concepts have faded or evolved. The 40,000-square-foot retailers are becoming 20,000SF, and 20,000SF tenants are becoming 10,000SF. Restaurants and discount stores, however are doing very well. Even with rents rising retailers such as 99 Cents Only Stores, Marshalls and Ross Dress for Less are expanding. Given their success, they remain a good option for vacant boxes which is great news for property owners.

Economic Overview:

SMALL LOANS TICKED UP APPRECIABLY DURING 4TH QUARTER OF 2014, according to Business Finance Capital of Los Angeles. "There has been a significant increase in SBA 504 loan activity during the 4th quarter of 2014," says Jacky Dilfer, executive director of BFC. "Though building inventory remains tight, interest rates are still low, and the 504 program offers great advantages to business owners, especially on larger buildings. The outlook for 2015 is positive, particularly with expectations of short-term rates increasing". As new businesses continue to open and the unemployment numbers continue to drop further below 6%, there is a positive knock on effect for consumers buying more and further stimulating retail tenants. Increased sales for retail tenants is adding security for retail owners as their tenants strengthens leading to more demand for space and improved security for owners and investors.

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