Los Angeles industrial real estate market report
Q2 2023
During the pandemic, industrial occupiers garnered massive amounts of warehouse space to keep up with demand. However, now that the pandemic has subsided, they are returning the excess space they acquired. As a result, an enormous amount of sublet space is currently available for lease. In fact, available sublet space has increased 31% from the previous quarter and a remarkable 99% compared to the second quarter of last year.
7.4 msf
Inventory
There is currently 7.4 million square feet of industrial product under construction, which is up from the previous quarter, where 6.2 million square feet was under construction. In total, there is 525.9 million square feet of industrial product in the Los Angeles market’s inventory.
-3.9 msf
Net absorption
During 2Q 2023, the Los Angeles industrial market saw 3.9 million square feet of negative absorption, adding onto the year-to-date total of 7.7 million square feet of negative absorption—the worst year on record.
$1.73 psf
Direct asking rent
Rates averaged $1.73 price/sf in Q2 2023. While this is a slight dip in the trend from last quarter, rates have generally risen since the beginning of the pandemic.
6.65 msf
Availabilities
Currently, there are 6.65 million square feet of industrial space available for sublet in Los Angeles. This is a 31% increase from the previous quarter, and, remarkably, a 99% increase compared to the second quarter of last year.
4.0%
Vacancy
Total vacancy this quarter registered at 4.0%, with 3.3% being direct and 0.7% being sublet. This is over two percentage points up from 2Q of last year, when vacancy registered at 1.9%.
$368.78 psf
Investment Sales
Investment sales price continues to increase, while sale volume continues to decrease. 2023 year-to-date sale price registering at $386.78 psf and a sale volume of $1.33B.
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