For each of the last five years, Los Angeles has been a top destination for foreign and domestic investors. The reasoning for this is best explained by Todd Tydlaska, executive vice president of capital markets at CBRE. “First off, it’s one of the six primary gateway markets that still feels affordable, comparatively speaking. Second, L.A. was late to the recovery this cycle compared with tech-driven markets such as San Francisco, Seattle and Boston. Third, no single industry is leading the economic recovery in L.A. Four, fundamentals are strong and there are significant barriers to entry in the Greater LA market, meaning that investors are underwriting continued strong leasing fundamentals. Five, this area boasts a tremendous population base that feeds the market locally and regionally; and last but not least, the ports of L.A. and Long Beach are a huge driver of economic activity and growth.”
Put simply, LA is red hot. The high levels of foreign investment in LA’s real estate market are indicative of LA’s growth. Industrials, especially in the inland empire, saw a 266% increase in foreign capital during 2019. Retail rents in LA have risen 19% over the past year. These numbers demonstrate exactly LA is the place to be if you work in commercial real estate. Even with concerns about a looming recession, LA’s economy is too robust for capital to not keep flowing.