Asking Rents Increase As Space Remains Limited

The Mid-Counties remains the tightest industrial market in the Southern California, with a vacancy rate of only 0.6%. This has left limited options for firms looking to expand in the region. Vacancy is expected to remain below 1% for the foreseeable future. 

Key Takeaways:

  • Average asking rents increased $0.02 Per Square Foot (PSF) Triple Net (NNN) over the prior quarter to $0.70 PSF NNN. Rates have surpassed their previous peak of $0.64 PSF NNN last seen in 2007.
  • The overall vacancy rate was 0.6% unchanged from the previous quarter. Vacancy has remained below 1% for the last eight quarters.
  • Sales and leasing activity was 1,165,600 square feet (SF) for the quarter, including one sale totaling 18,200 SF and 24 leases totaling 1,147,400 SF.
  • Net absorption was positive at 104,900 SF for the quarter. Low building availability is limiting the amount of net absorption that can occur.
  • Approximately 2,079,000 SF remains under construction.

Outlook:

The Mid-Counties market has hit a record low vacancy rate of 0.6%. This is putting upward pressure on asking rates, which have hit a new market peak. Consequently, demand to purchase real estate assets rather than leasing them continued to be strong.