Market Tightens: Asking Rents And Vacancy Flat
The Central Los Angeles market remains at a post recession peak with low vacancy rates despite the condition of much of the functionally obsolete and older buildings. Many of these lower clear buildings located in the Central Los Angeles submarket and near the downtown Los Angeles core have been converted to residential, retail or office product. Industrial demand is heavily concentrated in the Vernon and Commerce submarkets with food production and apparel manufacturing remaining to be the top industries.
The overall vacancy rate recorded 1.3%, unchanged over the previous quarter.
Asking rental rates held steady at $0.65 PSF NNN. Asking rents are at their highest point as landlords remain bullish on rents.
Sales and leasing activity totaled 3,065,100 SF, broken out into 27 sales (808,900 SF) and 65 leases (2,256,200 SF).
Net absorption totaled 140,100 SF for the quarter, pushing absorption to 632,200 SF year to date.
Only 578,200 SF of space remains under construction, a very low amount for a 251.8 million SF market.
Tight market conditions are expected to persist in the Central Los Angeles industrial marketplace. This is especially true given the amount of space being taken off the market near downtown Los Angeles. Many older and obsolete industrial buildings have been torn down or re-purposed to residential, retail or creative office uses. Many of these displaced tenants end up in the neighboring areas of Vernon or Commerce.