Vacancy Declines & Rent Increases
The Central Los Angeles industrial market is the oldest market in the Greater Los Angeles region, with a large portion of older and functionally obsolete buildings. Many of these lower clearance buildings are located in the Central Lost Angeles submarket, near downtown Los Angeles. Much of this space has 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 the top industries.
- The overall vacancy rate recorded 1.4%, a decrease of 10 basis points from the previous quarter.
- Asking rental rates increased $0.01 per square foot (PSF) triple net (NNN) to $0.66. Asking rents hit their highest recorded point despite having only slightly increased over the past year. Much of the gain in asking rents was seen in the infill Central Los Angeles submarket.
- Sales and leasing activity totaled 2,781,000 square feet (SF), broken out into nine sales (208,300 SF) and 56 leases (2,572,700 SF).
- Net absorption totaled 193,100 SF for the quarter.
- Only 418,900 SF of space remains under construction, a very low amount for a 249 million SF market.
Industrial space remains scarce in the Downtown industrial core as industrial product continues to be converted to non-industrial uses. The former American Apparel manufacturing space, for example, has been converted to creative office and retail. A significant downturn impacting manufacturing may lead to more industrial assets being repositioned to suit the changing nature of the Downtown industrial core.