Rents Rise While Market Conditions Remain Flat
- Asking rents have continued to rise, up $0.02 per square foot (PSF) triple net (NNN) over the quarter and up 19.4% over the previous twelve months. Rising property values are driving up asking rents, especially for smaller industrial properties in the Central Los Angeles submarket.
- Net absorption was flat at 22,600 square feet for the quarter and 348,900 square feet for the year. Industrial demand for older product remains tepid, especially as rents remain elevated in the Central Los Angeles marketplace.
- Vacancy was unchanged at 1.6% although that number may rise in future quarters as new space is delivered vacant to the market.
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.
We expect development and redevelopment activity to remain strong in the Central Los Angeles market over the next few years as investors and developers continue to seek value-add development opportunities and last-mile distribution centers in key central locations.