There’s little space in L.A. for new industry, though that’s not preventing megadeals on both the leasing and sales front.
Industrial sales volume in Los Angeles County and neighboring Ventura County ticked up six percent in 2019 year-over-year to a record-setting $4.1 billion, according to a new report from commercial real estate brokerage Transwestern.
The high points include Atlas Capital Group buying the L.A. Times printing plant in Downtown LA in December from Harridge Development for $241.5 million, or $367 per square foot; and Rexford International snapping up the Pomona Distribution Center from Prologis for $87.8 million, or $117 per square foot.
Those deals are happening at a time when contractors are struggling to find space for all types of projects in Los Angeles.
At the end of 2019, L.A. and Ventura counties had a 1.4 percent vacancy rate for industrial, easily the lowest among the major U.S. industrial hubs. By contrast, the Chicago area vacancy rate keeps dropping – but it was 5.4 percent after the fourth quarter of 2019. The New Jersey industrial market is also getting tighter, but the vacancy rate there is still higher, at 3.5 percent.
L.A. and Ventura counties have about 838 million square feet of industrial space, according to the report, with a mere 5.9 million square feet – or .7 percent of total space – in the pipeline for new construction.
The glut has driven up the cost of new leasing deals, which has caused current tenants to stay put for longer, according to Michael Soto, a researcher at Transwestern. It’s a situation that, at this point, only a major economic change like a recession would alter, the researcher argued.
The largest L.A. and Ventura county fourth-quarter lease deal, per the report, was electronic parts distributor WESCO taking about 305,000 square feet in Santa Fe Springs. Coming in second was Amazon’s roughly 300,000-square-foot deal in Torrance, with the e-commerce goliath setting up shop 10 miles away from the Long Beach ports.