Rents Continue To Rise Despite Weakening Activity
- Asking rental rates in the Central Los Angeles market have continued to increase, up $0.03 per square foot (PSF) triple net (NNN) to $0.75. While rents have slowly risen over the past 10 years, the pace of rent appreciation has noticeably increased over the past 12 months with current asking rents 12.4% higher than a year ago. Landlords remain especially bullish on rents.
- Sales and leasing activity totaled only 1,445,300 square feet this quarter, roughly half the level seen in the previous quarter.
- Space givebacks totaled 134,600 square feet this quarter, starting the year with negative absorption.
- Vacancy remained flat at 1.8%. Next quarter will see the completion of 202,600 square feet, which may lead to an uptick in vacancy.
Central Los Angeles Industrial Market:
The Central Los Angeles industrial market is the oldest market in the Greater Los Angeles region, with a large proportion of older and functionally obsolete buildings. Many of these lower clearance buildings are located in the Central Los 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.
Asking rental rates continue to increase in the Central Los Angeles marketplace as developers and investors put increased focus on value-add infill industrial and last-mile industrial distribution centers. There is now more industrial development in the Central Los Angeles market than at any time in the last five years.