SoCal industrial market report (Q3 2021)October 22, 2021
Southern California industrial fundamentals are as strong as ever with port activity at record high levels.
No slowdown in demand anytime soon, the ports have broken monthly cargo records regularly since last summer. Over the past 12 months, the ports had its two highest-performing quarters and top four individual months in the Port’s 110-year history. A lack of industrial availability is of concern near and long term as most submarkets in Southern California are under one percent vacancy. SoCal's industrial sector driven by historically high port activity and increasing ecommerce demand is driving vacancies to all-time lows. SoCal industrial, especially in Los Angeles and Inland Empire, is witnessing not only record rent growth but some of the tightest vacancy rates in the nation, And it is not just ecommerce but warehousing and manufacturing demand that registered increased activity over the past year. Developable land is becoming less making it very difficult for developers to find suitable sites which in turn is creating a dilemma for tenants. Industrial land is limited in Los Angeles, and cities are not modifying their general plans for more industrial development. Demand for industrial is so great investors in some instances are buying office buildings for underlying industrial zoning. Building costs and challenges for building materials, city’s being understaffed or not fully opened are all causing delays in the development and permitting process.