Logistics boom drives 12M sf of industrial leasing in Q1

Best Buy, Yusen Logistics signed some of quarter's biggest deals

TRD LOS ANGELES /
Apr.April 24, 2017 02:30 PM

For the Greater Los Angeles industrial market, it’s all a matter of logistics.

The shift toward last-mile facilities by e-commerce retailers and third-party logistics services has resulted in increased demand for light industrial real estate in the region, according to a first quarter market report from commercial brokerage CBRE.

Gross leasing activity in the industrial sector topped 12.1 million square feet for the first three months of the year — the highest level seen since 2013, the report shows. While companies such as Farmer Bros. and Toyota moved out of their spaces, new leases by firms such as Best Buy more than made up for them.

“The reshaping of the supply chain by e-commerce users placed a renewed importance on light industrial facilities,” the report said. “The mounting interest in light industrial facilities and constricted supply made the region a favorable owners’ market.”

The biggest transactions of the quarter included Best Buy’s deal to lease more than 470,000 square feet in Compton, as well as a 271,000-square-foot deal by Yusen Logistics in South Bay. Kitchen tool manufacturer Simplehuman USA leased 219,000 square feet in Long Beach and Capitol Logistics took 176,000 square feet in Carson.

As a result, the vacancy rate for industrial space was just 1.1 percent by the end of the first quarter and the average leasing rate had jumped to $0.76 per square foot, a 3.7 percent increase from the previous quarter and a 6.6 percent year-over-year increase. CBRE projects that rents will grow by an additional 6.6 percent by the end of the year.

Meanwhile, there was 6 million square feet of industrial space under construction in the first quarter, an increase of 27 percent since the end of 2016.

Blackstone Group’s real estate head Jonathan Gray recently said he was feeling bullish about logistics-driven properties. His firm is reportedly one of the suitors vying for the $13 billion warehouse real estate investment trust Global Logistic Properties, competing with private equity firm Warburg Pincus and several Chinese institutions.

“It’s hard not to be enthusiastic about logistics,” he said.
So, what could halt the logistics boom?

CBRE said there is some concern that new governmental restrictions placed on distributors and logistics firms could hurt the industrial leasing space. In on instance, a 45-day moratorium designed to stop traffic congestion in Carson halted the establishment of new truck yards, logistics facilities and container parking.


Related Articles

arrow_forward_ios
Heather Crossner and the site (Credit: Google Maps)

Bridge Development plans distribution center outside Torrance

Bridge Development plans distribution center outside Torrance
California is allowing barbershops and salons to reopen under new coronavirus mitigation guidelines (Credit: Noam Galai/Getty Images)

California allows barbershops to reopen, but LA holds back

California allows barbershops to reopen, but LA holds back
LA County assessor Jeffrey Prang

LA County properties valued at nearly $2 trillion…before pandemic

LA County properties valued at nearly $2 trillion…before pandemic
Brookfield Asset Management CEO Bruce Flatt

Brookfield scoops up Carson industrial properties for $64M

Brookfield scoops up Carson industrial properties for $64M
First District Supervisor Hilda Solis (Credit: Rebecca Sapp/Getty Images)

LA County select reopening target date for restaurants and retailers

LA County select reopening target date for restaurants and retailers
Eric Garcetti orders a moratorium on LA commercial evictions (Photo credit: iStock photo)

Garcetti orders a moratorium on commercial evictions in LA

Garcetti orders a moratorium on commercial evictions in LA
An illustration of Airbnb's Chief Executive Brian Chesky

Los Angeles No. 1 in country for Airbnb, other short stay rentals

Los Angeles No. 1 in country for Airbnb, other short stay rentals
LA promo

Coming Soon: The Real Deal Los Angeles’ Winter 2020 issue!

Coming Soon: The Real Deal Los Angeles’ Winter 2020 issue!
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...