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LA Ranks High for CRE Investments Worldwide

JLL Issues Report on Top Markets for Global Real Estate Investment
January 29, 2018
Los Angeles has risen to second place for commercial real estate investment, according to a recent report from JLL.

The firm’s report ranks Los Angeles as being second only to London out of the top 30 cities worldwide in attracting commercial real estate investment, with New York City following next. JLL's findings closely mirror a recent survey published on market-based real estate investment by foreign investors by the Association of Foreign Investors in Real Estate (AFIRE).

JLL reports Los Angeles has moved up as a global market for real estate investment from #5 in 2015 to #2 in 2017. The news does not surprise Los Angeles Mayor Eric Garcetti.

“L.A. is setting records for investment, tourism, and trade from everywhere in the world,” Mayor Garcetti tells CoStar News. “Real estate is one of the engines driving our economy forward - and Angelenos across the city are seeing the benefits of the new jobs and other opportunities that it brings.”

Many factors contribute to Los Angeles' high ranking when it comes to commercial real estate, according to Steve Basham, senior market analyst with CoStar Market Analytics.

“L.A. is a very diverse, international city,” Basham noted. “You've got a strong presence from foreign companies and many strong immigrant communities that have been growing for decades. The ports also draw a lot of international business.”

Both the Ports of Long Beach and Los Angeles had record-breaking years last year with the latter moving more cargo than at any time in its 110-year history, with 9.3 million Twenty-Foot Equivalent Units, or TEUs, which was a 5.5-percent increase over 2016's record-breaking year, according to Rachel Campbell, a Port of Los Angeles spokesperson.

“It's the most cargo moved annually by a Western Hemisphere port,” Campbell said.

The variety of industries in this market also has a lot to do with last year’s high number of commercial real estate transactions, experts say.

“Probably because of our exploding tech, media and content industries,” Carl Muhlstein, international director at JLL, said. “Those seem to be the storied industries, grabbing all the headlines.”

The diversification of the Los Angeles market is also viewed as a benefit by investors.

“No one industry controls the market,” Muhlstein said. “We have a diversification of industries.”

Los Angeles also benefitted from expedited improvements to the area's highway system after being awarded the Olympics in 2028, according to JLL's Muhlstein.

“The Olympics produced tremendous hotel building and has taken away years from the implementation of transit,” Muhlstein said. “It has sped up the process.”

City officials announced a “Twenty-Eight by '28” plan last year in order to ensure 28 transit and road projects are completed by the Olympic Games.

Phillip Washington, Metro CEO, referred to it at this week’s “FutureBuild 2018,” sponsored by the Urban Land Institute (ULI) and VerdeXchange, as, “The most ambitious transportation infrastructure initiative in this country right now.”

The projects include the Crenshaw/LAX Line, the Regional Connector and the Purple Line Extension of the subway to Westwood, according to Metro.

Karen Jordan, Los Angeles Market Reporter  CoStar Group   
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