West Los Angeles market expert Kevin Nielsen reports that since tighter lending practices have helped to dampen transaction velocity, many owners have decided to retain current portfolios until economic conditions improve.

As a result, sales activity has slowed 38 percent compared to one year ago.

Cap rates have increased modestly in the Westside Cities area, Nielsen says, ticking up 20 basis points in recent transactions to the mid- to high-4 percent range.

Currently, cap rates are averaging between 3.5 percent and 5.0 percent, depending on the quality of the asset.

So what's the outlook for this market?

Nielsen says deal flow will continue, albeit at a more measured pace, as many local buyers remain unwilling to pay higher upfront costs for future rent growth.

Nonetheless, properties with strong operating fundamentals in locations relatively shielded from new construction will continue to receive competitive offers.

For more information on this market, contact Kevin Nielsen at:
www.knocommercial.com.

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Published: June 2, 2008

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