Rental Rate Rises to Highest Ever Rate
- Asking rental rates increased $0.03 per square foot (PSF) triple net (NNN) to end the quarter at $0.79. Rents remain at an all-time high and have surpassed the previous peak of $0.68 PSF NNN seen in 2007.
- Sales and leasing activity totaled 1,451,900 square feet, double the amount seen in the fourth quarter of 2018. The region saw strong sales activity with 13 sales (537,800 square feet) and 24 leases (914,100 square feet).
- The vacancy rate dropped 10 basis points to 1.4%, the lowest recorded vacancy rate ever for the San Fernando Valley & Ventura County marketplace.
- Net absorption was positive 247,900 square feet for the quarter due to several large transactions.
The San Fernando Valley is the most populous region of Los Angeles and home to major motion picture, music recording and television production companies. Much of the industrial infrastructure is devoted to ancillary services for the entertainment industry and to serving the local population. The San Fernando Valley has recently seen an influx of value-add investors continuing to purchase properties in the region.
The San Fernando Valley industrial market is seeing a perfect storm as investors shift focus from lower yield core industrial assets towards value-add properties in infill secondary and tertiary markets. One such acquisition was Rexford's purchase of the Conejo Spectrum, a 531,400-square-foot industrial campus for $106.3 million, or approximately $200 a square foot.