Rents Rise & Vacancy Remains Flat
The San Gabriel Valley market has surpassed the previous market peak in terms of rents and vacancy. Exceptionally low vacancy rates and rising rental rates are leading many tenants to consider purchasing their real estate.
Average asking rents increased $0.02 PSF NNN over the quarter to end at $0.66 PSF NNN. Rents have surpassed their previous cycle peak of $0.62 PSF NNN reached in late 2008.
Vacancy remained steady at 1.3% despite the addition of 323,000 SF of new supply. Tight market conditions continue to limit expansion opportunities for firms in the region.
Sales and leasing activity totaled 2,269,000 SF, broken out into 21 sales (838,700 SF) and 33 leases (1,430,300 SF).
Net absorption totaled 234,200. We expect net absorption to be higher in future quarters as the recently completed space is absorbed.
There remains only 813,200 SF of space under construction as we reach the tail end of the recent construction boom that has taken place over the last two years in the San Gabriel Valley industrial market.
Tight market conditions, limited development and rising industrial rents are expected to persist in the San Gabriel Valley industrial marketplace. The surge in rents is prompting many users to consider buying their properties, however the available inventory is insufficient to meet demand. New projects that completed this quarter will likely be leased or sold in short order, leading to further decreases in the vacancy rate. Market conditions will continue to remain tight as the major industrial drivers of the San Gabriel Valley, import / export businesses, food manufacturing and life sciences, continue to expand.