2018 Ends With Rents At Highest Point Ever
- Tight market conditions continue to push asking rents skyward, with rents rising $0.02 per square foot (PSF) triple net (NNN) to end the year at $0.86 PSF NNN, their highest point ever
- Space givebacks continued this quarter with 243,000 square feet returned to the market vacant. Total negative net absorption for 2018 was 651,900 square feet, due mostly to lack of new development.
- Industrial space under construction rose this quarter to 1,612,500 square feet. Most of these projects are scheduled to finish construction in the next six to nine months.
- Sales and leasing activity reached 2,698,400 square feet this quarter, which is the highest quarterly gross absorption for 2018.
The South Bay remains the premier market for distribution companies and cargo-centered sea-and-air industrial users. It is nearly fully developed, making land incredibly scarce. Tight market conditions and a lack of larger modern space continue to be deterrents that drive tenants to neighboring markets, primarily to the east.
Rents are at their highest levels ever, prompting many users to consider buying their real estate. This proves difficult, however, as few owners are willing to sell and the available inventory of buildings for sale is insufficient to meet demand. Land is incredibly scarce and many industrial users are having to get creative or face paying a premium to secure land for truck, car or trailer storage.