​Commercial Real Estate Appraiser LA: Industry Industrial Rents

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Commercial Real Estate Appraiser Los Angeles: Industry Industrial Rent Lease Rate Study + Fair Market Rent Opinion Survey 

As a service to you, I've included a recently provided summary of completed Industrial Real Estate Valuation project findings: Los Angeles County, Industrial Property Market Level Rents and FMR Lease Comments.

Useful, real time information that is directly market participant derived, verified and compiled. The most up-to-date, detailed Rent Comparables for Investment Properties and Sale Pricing for occupants to help a Tenant or Landlord, Investor, Owner, Seller or Buyer solidly understand, wrap their arms around a specific subject property & dynamic area nuances for lease, sale or purchase consideration: Present snapshot in time or prospective mid to long term general state of the market outlook conditions, trends and leasing & sales activity. This extremely difficult and time-consuming findings collection process is based upon numerous, confirmation discussions directly with primary parties to each individual, successfully closed transaction. The methodology absolutely yields the most recently transacted and accurate type of highly reliable & well supported, strictly market driven data that is not easily obtained.

To ensure even more solid, market level reinforcement that is credible and highly support for Fair Market Rent or Fair Market Value, several comments and opinions are secured from local leasing & sale expert specialists for an arm’s length and objective, neutral third party pulse of a locational submarket. Contacts are made to various sources such as property owners, developers, property managers, real estate appraisers, asset managers & real estate brokers in the specific subject property immediate area to obtain, explain and compare and contrast micro and macro market dynamics & differences. This reinforcing, solidifying combination gels and enables clients to have an even higher level of confidence as an insurance policy to better make educated peace of mind decisions, resulting in the best & most profitable final move forward investment decisions. Initially, there are many unknown possible option scenarios that are at first wide open and unclear.

LOS ANGELES COUNTY, CITY OF INDUSTRY FAIR MARKET RENT & FAIR MARKET VALUE - COMMERCIAL REAL ESTATE VALUATION STUDY FOR AN INDUSTRIAL REAL ESTATE APPRAISAL ADVISORY PROJECT:

• General Real Property Use(s): Industrial
• Specific Use(s): Warehouse, Distribution,
• Location(s): Cities of Industry, La Puente

• Local Submarket Expert Opinion Survey estimates from the most active leasing and sales experts in the immediate area for the Subject Property’s Market Level Pricing in 2015:

o Base Rent NNN or Modified Gross Leased to a new Tenant: Up to Mid to High $.70 / sf / month prior to additional NNN's or CAM's, additional operating expense pass thru's also paid by a tenant on top of base rent

o Actual Capitalization Rate of Return or Investor Required Rate of Return: Not available o Actual Gross Income Multiplier Sale Price as a Value Indicator: Not applicable
o Sale Price / sf of Building for a Full Owner User Buyer: Up to Mid $170’s / sf of improvements for a property sold to an entire occupancy purchaser

• Opinions and Comments of Future General Market Conditions & Trends for 2016: N/Avl

• Base Rent Range on a NNN or Modified Gross basis: Up to Mid to High $.60 / sf / month for a space actually occupied by a tenant or subtenant, direct leased or a renewal or subleased at market rent levels • Landlord Provided Concessions or Discount Incentives to Tenants to construct building improvements:
o Free Rent Range: Up to 4 months base rent discount or abatement as an enticement to Tenant to lease
o Tenant Improvement Range: Up to Carpet and Paint / sf Landlord TI contribution towards improvement work build out of a unit
• Additional NNN or CAM Operating Expense Pass Throughs: $0 / sf / month that Tenant also pays to Landlord as reimbursement payment for proportionate or pro rata share of Common Area Maintenance Expenses or CAM's for Property Taxes, Insurance, etc. Can also include extra expense pay back of separately and directly metered Utilities, including but not limited to water, gas, electricity, sewer / trash removal, lighting, landscaping, security, etc.
• Additional Parking Cost: None for a tenant to lease a space
• Lease Up Absorption or On the Market Period(s): Up to 4 months for a tenant to eventually rent a unit in a building or project after being actively market available for lease

• Actual Capitalization Rate of Return Sale Range for Leased Investments Sold: N/Avl for 100% Tenant Occupied buildings, can be local, regional or national credit tenants and varies greatly on # of months lease term remaining and annual base rent bumps, also known as Investor Required Return on Investment or ROI

• Sell Out Absorption or On the Market Sale Period(s): Up to 8 months for a buyer to open escrow and eventually purchase a property

* Conclusion: Total $ / sf NOI Rent Range - Including Base Rent + Additional CAM Expenses: Up to Mid to High $.60 / sf / month. A 0% difference exists end of the day Total Rent that is paid. Not yet taking into consideration yearly base rent rate increases that are fixed, stepped or based upon inflation such as the CPI or Consumer Price Index or for new or existing renewal tenant concessions or discounts that can have a substantial effect on net effective rent occupancy cost analysis and how much is actually being spent apples to apples relative to other available supply of currently possible lease options.

Surprisingly, huge net effective rent discrepancies can exist over a lease term. Even though a majority of the completed comparable transactions are regionally, drive times are longer and income / population demographics are similar with the subject property city and moderately close proximity from the subject property, properties next door or even across the street are unique and not similar or alike.
Dissimilar physical characteristics vastly exist, due to general and specific location(s), specific use(s), year built, quality and condition of improvements build out. These are just some of the major important items that substantially affect rent obtained or paid. The length of the leases were up to 64 month periods.

Depending on which polar end of the spectrum you are and your strategic goals, a Landlord seeks to obtain maximum rent, conversely, a Tenant strives to achieve maximum cost containment. A large amount of money can unnecessarily be lost or saved over a fairly short time period of year over year.

If interested, I’m more than happy to discuss the other facets of this study and opinion survey in more detail.