Let’s start the June SoCal Industrial Real Estate Snapshot with the takeaway – the experts say, The overall industrial market is becoming a more landlord controlled market. Vacancies are expected to remain in the low 4% range, with rents expected to rise in the 3% to 6% range in the coming year. > So if you’re thinking of adding industrial real estate in Los Angeles to your portfolio, now is the time.
Los Angeles metro industrial property sales prices finished the 1Q at $129.24sf, in increase of +2.1% for the quarter and +14.0% year over year, according to Loopnet.
“The outlook for 2014 is that the industrial market will remain very healthy,” observes Blaine Kelley, senior vice president of CBRE’s supply chain practice.
In the past year, 49 of the 50 largest warehousing markets experienced growth, and Los Angeles gets to plant their flag near the top of the heap. Depending upon the information you glean – the Los Angeles industrial real estate market has the 3rd most impressive lease rates in the nation – only behind Newark, New Jersey (obvious reasons) and Anchorage, Alaska (because everything needs to be flown in).
In 1Q 2014, the L.A. County industrial market witnessed vacancy rates decrease from 4.6% to 4.4%. The latest L.A. County Industrial report from Daum Commercial Real Estate notes that average asking rents increased 5.4%, year over year, moving from $0.56nnn to $0.59nnn. During 1Q, gross absorption totaled 12.8 million square feet, while net absorption posted a gain of 1.9 million square feet of occupied space.
Standard industrial asking rental rates increased 5.4%, year over year, moving from $0.56nnn to $0.59nnn. Notes Daum commercial. Of the four major markets in Los Angeles County, the LA-North market ended the quarter with the highest standard industrial rental rate of $0.68nnn, followed by the LA- West/South market at $0.63nnn,
the LA- Central/SE markets at $0.55nnn, and the San Gabriel Valley market at $0.53nnn. Average rental rates increased 1.7% from the previous quarter, moving from $0.58nnn to $0.59nnn.
Economists who specialize in the industrial sector say that if Americans are working and consumers are spending, the need for warehouse and distribution space will increase. The long-term outlook is that market fundamentals will continue to improve, with activity levels, rents and sale prices all trending higher. The investment and sale market for industrial real estate in Los Angeles County remains strong as the available supply of for sale inventory remains low.
For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – or 310.392.1211, and let us move forward together.