Nearly 10M sf of LA industrial space leased in Q2

The Los Angeles industrial market recorded one of the busiest quarters ever, largely on strong demand for logistics and distribution space.

Around 9.8 million square feet of space was leased in the second quarter, according to a JLL report.

L.A.’s industrial vacancy fell to 1.9 percent compared to the first quarter. That was just behind nearby Inland Empire; and New York City, which tied for the lowest rate in the nation. Inland Empire and New York both reported just 1.7 percent of space vacant.

Orange County’s 2.9 percent industrial vacancy rate was also among the lowest in the nation.

Southern California’s historically strong industrial market can be attributed to its proximity to the ports of L.A. and Long Beach. Submarkets near the ports accounted for 69 percent of total leases signed from April through June.

Last year, the pandemic led to a backlog in the flow of goods from the ports, but that problem has largely been resolved. Container flow through the Port of L.A. hit an all-time monthly record for western hemisphere ports in May.

Average asking industrial rents in L.A. County continued their steady 10-year-long upward trajectory, reaching $1.02 per square foot. Sublease average asking rents are more volatile, but those also rose to $1.17 a foot compared to the previous quarter.

The nationwide pre-leasing rate hit a record high of 61.3 percent in the second quarter. That’s nearly twice the 34.6 percent from the second quarter last year, when pandemic-fueled uncertainty suspended most activity.

Meanwhile last quarter, national net absorption hit a record high of 107 million square feet, with vacancy falling to 4.8 percent.