Rising Rents & Continued Construction For 2019
- Tight market conditions in the South Bay continue to push asking rents skyward, with rents rising $0.03 per square foot (PSF) triple net (NNN) to start the year at $0.89, their highest point ever.
- Industrial development remained high with 1,577,800 square feet of space currently under construction. Most of these projects are scheduled to finish construction in the next six-tonine months.
- Sales and leasing activity reached only 1,912,000 square feet this quarter, which breaks out into 12 sales (270,400 square feet) and 32 leases (1,641,600 square feet).
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 and will likely continue to increase as demand remains high and desirable industrial space remains scarce. Tenants may find some relief in the 1,577,800 square feet of space about to be delivered to the market. Of this amount, roughly one third is already pre-leased. 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. Buildings with excess land are leasing at a premium in the South Bay industrial market.