The overall Los Angeles economy has been severely weakened by the pandemic, but industrial real estate appears to be strengthening.
There was about 11.2 million square feet of new industrial leases were signed in the third quarter, according to a new report from Cushman & Wakefield. That compares to the sharp rise in L.A. office market vacancy, according to a separate Q3 report from CBRE.
The wave of new industrial leases from July through September nearly made up for the drop in second quarter numbers, when the coronavirus was at its peak in L.A. County.
Average lease price of 93 cents per square foot was up 2.2 percent year-over-year, according to Cushman & Wakefield. Countywide, the industrial market vacancy rate hovered at 2.6 percent in Q3, just a tick above what it was at the end of the third quarter of 2019. The market has about 1 billion square feet of total space.
E-commerce-related signings continue to drive the sector’s success.
“It appears that Los Angeles County’s high unemployment rate of 16.1 percent in August has not impacted industrial demand due to the exponential growth of e-commerce,” the report concludes.
Imports into the port of Long Beach, the nation’s largest hub for goods imported from Asia, are also up year-over-year.
And industrial real estate also continues to be a big draw for big companies. Locally, Brookfield Property Partners and Blackstone Group added to their massive overall portfolios last quarter. Brookfield paid $68 million for a 303,000-square-foot property in Santa Fe Springs — Unified Grocers was the seller — marking the largest industrial property sale in the county from July to September.
Blackstone paid Iron Mountain $62 million for a 244,000 square-feet of warehouse in Pico Rivera.