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New Study Rates L. A. as Best Poised for Industrial Growth

February 14, 1988

That long-expected downturn in the real estate industry isn't expected to result in decline of industrial development here. A new study rates the Los Angeles at the top of a list of 10 cities "best positioned for industrial growth" this year.

The two-year economic outlook by Alex. Brown Realty Advisors Inc., Baltimore, ranks Chicago in second place, followed by Detroit, Philadelphia, Boston, Minneapolis-St. Paul, Newark, N.J., St. Louis, Cleveland and Cincinnati.

Los Angeles is also listed among the leaders in office building development, along with Chicago, Philadelphis, Boston and Cincinnati, according to the study.

"Office is clearly the most fragmented of all the real estate markets," according to Robert H. Gidel, president of Alex. Brown Realty Advisors. "It is generally overbuilt nationally because 150 million square feet (of office space) was delivered in 1986 and another 120 million square feet in 1987."

The study, while cautioning that retail sales figures do not justify the amount of new retail construction under way around the nation, also said that Los Angeles is expected to one of the leaders in retail development this year.

Gidel was less optimistic about apartment construction: With the exception of pockets in the Mid-Atlantic states, apartment vacancies nationally have risen to the highest levels in 20 years.

This year is also expected to be another difficult one for the hotel industry, Gidel said. There were a record 87,000 net rooms added to the market in 1986 and another 50,000 in 1987, but occupancy rates were at 66% last year, an increase of less than 1% over 1986.

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