Vacancy Continues To Decline & Rents Rise
The San Fernando Valley is the most populous region of Los Angeles and home to the major motion picture, music recording and television production companies. Much of the industrial infrastructure is devoted to ancillary services for the entertainment industry and population serving industrial warehouses. The San Fernando Valley has recently seen an influx of value-add investors continuing to purchase properties in the region.
- Vacancy declined 10 basis points to 2.0% on strong industrial demand. This is the lowest rate in recorded history for the San Fernando Valley / Ventura County marketplace.
- Asking rental rates increased $0.01 PSF NNN to $0.67 PSF NNN. Rents are still below their peak of $0.68 PSF NNN in 2007.
- Sales and leasing activity totaled 1,740,300 SF, broken out into 13 sales (775,700 SF) and 35 leases (964,600 SF).
- Net absorption totaled 389,800 SF for the quarter.
- Construction increased to 1,667,300 SF as construction activity has picked up in the San Fernando Valley.
The San Fernando Valley is in the middle of a building boom. Tight market conditions and rising rents are leading to a much needed increase in supply. As these newly completed buildings are leased up, we expect to see increased investor activity on these newly leased buildings. For industrial users looking to find the ideal space to meet their needs, they will likely have to expand their industrial footprint by taking additional space in soon to be constructed speculative buildings or in build to suit projects, as quality space remains hard to find in this market. Other alternatives for industrial space include the Tejon Commerce Center, which offers Class A space for larger users in the $0.40 PSF NNN range.