Introduction

In spite of the nationwide malaise, San Francisco, California is out pacing their growth levels they had throughout the1990's. Certain market regions in California have well-funded and an expanding tech sector, therefore both leasing and investment activity is extremely robust. The high demand and significant shortage of space in these regions have been driving forces for their regions positive momentum. Other market regions in the state are experiencing a slow down, especially in rental activity as lessees react to economic concerns with extreme caution.

Los Angeles

Several years ago square footage rates for office properties reached a high of $329.75. When comparing today's prices this is 25 percent lower. The all time low occurred in August of 2011, which was $241.01 a square foot.

In the last quarter the sale prices for office properties in Los Angeles, per square foot increased by 1.4 percent to $193.98. However for the year sales prices are down 4.5 percent. Despite this the sale price for office property has been steadily rising for the last three months.

Industrial property was typically $133.47 a square foot. This is 5.7 percent lower than last quarter of and is the lowest in three years. The previous low was $132.13 set just last month.

Retail property this month was $243.12 per square foot. This is 2.5 percent lower than the last quarter. This month the prices for retail properties are the lowest it has been in over three years. Before this the record low was $245.02 a square foot.

San Francisco

The typical price for office properties for the month was $256.98 per square foot. This is a new low and is down 1.4 percent from last year. The average sale price is on a downward trend. Office space in San Francisco has seen a 0.5 percent decrease to $202.01 for the average sale per square foot. The highest sale was in 2009 at $248.56 per square foot.

Industrial properties average rate was $141.22 a square foot. This shows a 0.7 percent decrease from the end of 2011.

Retail prices averaged $238.11 per square foot, which is a 0.6 percent increase compared to the end of last year. In June the price was set at $227.28 per square foot.

The office space market ended 2011 with 12.1 percent vacancies. This is down 12 percent from three months ago. The asking rate has increased from $27.98 to $32.90 per square foot over the past year.

Currently the office rental rates for office spaces are $36.85 per square foot. Last year it stood at $31.67 per square foot. This means rents have increased by nearly 14 percent. If this trend continues through the end of the year, rents are expected to increase by 20 percent and approach $41.00 per square foot.

San Diego

During 2011, the San Diego office market continued to improve. Total vacancies stand at 18.5 percent compared to 19.2 percent last quarter and 19.5 percent one year ago. The current vacancy of 18.5 percent is expected to decline approximately one percent per year over the next five years. Tenant activity has increased significantly when compared to the previous two years.

The average for office properties was $256.32 per square foot. This is down by 1.3 percent from last year. Prices fell to a new low this month. The previous low was set last month at $257.89 per square foot.

The price for industrial property for last month was $141.66 a square foot. This is a dive of 9.2 percent. Rates for industrial property are at their lowest in three years. The previous low was $142.86.

Prices for retail property rose to $238.07 per square foot. For the year prices have risen by 1.6 percent. The peak was hit in 2009 at $279.08. In comparison this is 14.7 percent lower today.

Interest in office property listed has increased this quarter by 4.8 percent since October, 2011. The demand for industrial properties spiked with demand increasing by 7 percent since October, 2011. The demand for retail property has held level since October, 2011.

Irvine

The common price being asked this month for office properties in Irvine is $240.01 per square foot. In 2009 prices were at their highest at $321.57. When compared the current rate is down by approximately 24 percent.

The average sale price for office properties per square foot rose by 1.3 percent to $193.11 per square foot. This is 2.2 percent higher than the lowest price of the past three years.

The standard price for industrial properties was $131.27 a square foot. Industrial properties are the lowest they have been in four years. Compared to last quarter industrial property has seen a decline of 0.1 percent for its average sale price per square foot.

The price for retail properties was $242.35 per square foot this month. Compared to the end of 2011, this figure shows a 0.6 percent decrease in price. This month the prices for retail property are the lowest in three years. The rate of decline has slowed in the average sale price for retail properties. Sales prices for retail properties are down 0.7 percent for the year.

Business Incentives

California has several opportunities and policies available to help those who establish operations in the state. Substantial tax incentives and benefits are available under the Enterprise Zone program. Businesses can earn tax credits for every qualified employee, as well sales tax credits on any qualified purchase of equipment. Other state programs include financial assistance via industrial development bonds and research tax credits. Currently the state uses a single sales method for assessing taxes. The tax laws in California allow for a net operating loss carry over.

References:

Governor's Office of Business www.business.ca.gov/BusinessIncentives.aspx
California Real Estate Journal www.ketupa.net
Realty Times: Real Estate News www.realtytimes.com

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