The Real Deal Los Angeles

Industrial rents keep rising in the South Bay: report

Appreciation is slated to continue for the next two years
By Cathaleen Chen | May 16, 2016 12:00PM

Microsoft PowerPoint - COW_Los Angeles_industrial_May 9 2016The South Bay is still the hottest industrial submarket in Los Angeles.

This southwest region of L.A. County is seeing continued appreciation in rents, according to a recent JLL report. Unless there is an economic downturn, the steady rise in rents is slated to continue for the next two years, the report shows.

The South Bay currently has a less than 1 percent vacancy rate, the report stated. The current high water mark monthly rent rate is $0.73 per square foot for properties larger than 75,000 square feet. By year end, that rate is anticipated to rise just north of $0.75 per square foot.

In the first quarter of 2016, the El Segundo region of the South Bay also saw its lowest office vacancy rate, 12.1 percent,  as well as an average asking rent of $2.25. In El Segundo, Continental Development Corporation is now redeveloping 840 and 880 Apollo Street, a total of 182,000 square feet of leasable space.

In L.A. overall, the industrial market is tighter than ever. As demand rises well above the current supply, average rent persists on its upward streak. According to a report by CBRE, the county average was $0.71. The most expensive submarket in the first quarter of 2016, based on this report,  was DTLA with a $0.78 average.

South Bay is seeing some new industrial construction, which may help release some of the pressure on rents. More than 84 percent of L.A.’s 3.8 million square feet of industrial properties currently undergoing construction is located in South Bay and the San Gabriel Valley.