Rents Hit Previous Peak, Vacancy Hits New Lows

 

Mid Counties remains the tightest industrial market in Southern California, with a vacancy rate of only 0.6%. This has left few options for firms looking to expand in the region.

Key Takeaways:

  • Average asking rents increased by $0.01 PSF NNN over the quarter, a 10.3% increase year over year, to end at $0.64 PSF NNN. Asking lease rents have hit their previous peak, last seen in 2007.

  • The overall vacancy rate was 0.6%, down 10 basis points from the previous quarter. Over the past 12 months, the vacancy rate has decreased 40 basis points from 1.4% reported in Q3 2015.

  • Sales and leasing activity increased to 1,824,000 SF, including 7 sales totaling 189,400 SF and 38 leases totaling 1,634,600 SF.

  • Net absorption increased to 206,500 SF due to several new buildings being completed this quarter.

  • There was 123,600 SF of new buildings completed this quarter while 541,800 SF of space remains under construction.

Outlook:

The Mid Counties market has hit a record low vacancy rate of 0.6% and future quarters could bring further declines. This is putting upward pressure on asking rates which have hit a new market peak. As such, there is continued strong demand to purchase real estate assets rather than leasing them.