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Dick Turpin

'Outlook Index' High on L. A. Real Estate

October 04, 1987|Dick Turpin

Guardedly optimistic.

That's the safest phrasing for a prediction, but that's what the current outlook is for Los Angeles County's real estate domain from the perspective of Laventhol & Horwath, the eminent realty consultants.

For the remainder of this year and into six months of next year, the company's seers offer their best guesses and expect a strong economy throughout the greater Los Angeles area.

Their "outlook index" anticipates that single-family home construction activity will be strongest in the San Gabriel, Antelope and Santa Clarita valleys.

The San Fernando Valley and the South Bay area can look for mixed construction activity, while downtown and central Los Angeles, West Los Angeles and the Pasadena/Glendale area can expect less activity because of the limited availability of land.

Apartment construction is predicted as most favorable in the downtown/central, West Los Angeles and San Gabriel Valley areas. Elsewhere, expectations are mixed.

Building for retail uses will be best in the Santa Clarita and Antelope valleys, while office construction is expected to continue strongly in the downtown/central and West Los Angeles areas.

Industrial building will be best in the downtown/central zone and lodging construction will be strongest in the San Fernando and Pasadena/Glendale areas, according to the index.

At the same time, another source, Cahners Publishing Co.'s newly released national summary on construction hot spots of 1987 places the Los Angeles/Long Beach market at the top in non-residential construction, retaining its 1986 ranking.

Indicating further the strength of the western cities in the nation's economy, among the top 20 in the Cahners listing are Anaheim/Santa Ana, 6th; Phoenix, 8th; Riverside/San Bernardino, 10th; San Diego, 13th; San Francisco, 18th and San Jose, a newcomer to the top 20, is 20th.

The Laventhol & Horwath summary says:

"While many other real estate markets across the nation lag or decline, Los Angeles still offers the serious and imaginative investor considerable real estate opportunities.

"A strong, diversified economy, richly varied population base, strategic location ideally positioned to capitalize on Pacific Rim trade and a year-round favorable climate (these phrases are not reprinted from a Chamber of Commerce brochure) have enhanced the national and international prominence of Los Angeles, and so have created significant potential for real estate investment and development.

"While brisk development activity and slowed growth in demand have heightened some investors' down-side risk in certain areas, recent trends . . . reflect the overall vitality of the Los Angeles real estate market."

The report calls attention to the "diminishing supplies of developable land available in Los Angeles County" and predicts that developers will be seeking greater opportunities to renovate, remodel and reposition, not only historic structures, but also projects built in the 1950s and 1960s that require some freshening and upgrading of facilities to stay in the competitive swim.

Historic structure renovation still qualifies for tax credits, under the 1986 tax laws, the report adds.

And it notes that construction-limiting Propostion U, approved by voters last November, will force communities within the county to weigh carefully what is best for new development, paying particular heed to the impact of traffic and hillside residential projects on an area's future.

Finally, the report happily calls attention to adjunct construction activity.

"The recent development and expansion of cultural amenities and specialized wholesale markets throughout Los Angeles is creating stronger linkages between land uses and urban activity centers.

"The recently completed Museum of Contemporary Art, the Los Angeles Actors' Theater in downtown Los Angeles, the expanded Wholesale Produce Market and Pacific Design Center, and the renovated County Museum of Art have assumed greater roles in defining the character of new development in the established real estate markets of Los Angeles County."

The construction landscape can stand that kind of leavening.

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