Los Angeles industrial real estate market reports
Demand for industrial space in Los Angeles remains highly competitive as tenants continue to scour for available space. Additionally, the rise in fuel and drayage costs have attracted new occupiers into the market as they look for space closer to the ports in order to save on costs. This increase in demand has pushed rental rates to new all-time highs as landlords and investors capitalize on current market conditions.
The industrial sector received over 1.4M SF of new construction in 1Q 2022, bringing the total inventory for Los Angeles to 554.9M SF. Under 5.7M SF remains under construction to help supplement the rise in demand but it is common for new industrial space to become pre-leased a year in advance before completion.
Los Angeles continued to report positive gains in absorption with over 1.5M SF in the first quarter. This makes it the 7th straight quarter of positive gains and 6th quarter of at least a million SF absorbed.
Direct Asking Rent
Direct asking lease rates continue to break barriers, reporting new all-time highs in 1Q 2022 at an average of $1.40/SF on a triple-net basis. This is an increase of 35.9% year-over-year and rental growth is forecasted to be between 10%-15% in 2022.
Total available industrial space slightly increased by 21K SF to 16.7M SF market-wide. Availabilities have fallen over 15.6M SF since the start of the pandemic in 1Q 2020.
Direct vacancies have decreased by 140 basis points (bps) since 1Q 2020 to 1.4%. At the end of the first quarter, 7.1M SF of direct and 865K SF of sublease industrial space remains vacant.
The average sales price for industrial space in 1Q 2022 was $229.24/SF, an increase of 24.5% from the year prior. Steady demand and lease fundamentals continue to attract investors as they look to capitalize on leasing fundamentals.
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