Rents Rise & Vacancy Falls To Lowest Rate Ever
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 $0.01 PSF NNN over the quarter to end at $0.67 PSF NNN. Rents have surpassed their previous cycle peak of $0.62 PSF NNN reached in late 2008 and show no signs of slowing.
Vacancy fell 10 basis points to 1.2%, the lowest rate ever recorded for the San Gabriel Valley. Tight market conditions continue to limit expansion opportunities for firms in the region.
Sales and leasing activity totaled 1,375,000 SF, broken out into 10 sales (394,500 SF) and 28 leases (1,375,000 SF).
Net absorption totaled 197,000 for the quarter and 1,203,000 SF for all of 2016.
There remains 1,331,200 SF of space under construction as construction activity remains strong due to record low vacancy rates and record high rents 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.