The Southern California industrial market is having a very good 2021.
Los Angeles tallied $2.8 billion in industrial sales from January through August, the highest total of any market in the nation, according to Commercial Observer. L.A., the Inland Empire and Orange County also accounted for more than 15 percent of the country’s industrial real estate transactions by dollar volume over the same period, according to the report.
Strong demand for logistics space in particular drove $36.6 billion in investment sales nationwide, a record for the first eight months of the year.
In addition to L.A.’s high total, the Inland Empire had $2.3 billion in sales. Both areas saw strong rent growth and low vacancy rates.
The ports of L.A. and Long Beach help make SoCal the nation’s strongest industrial market. Steady demand for space, especially in a post-Covid world, has drawn investors from across the world.
Nationally, industrial rents were up 3.8 percent year-over-year in August. Eleven metro areas saw year-over-year rent growth above that percentage, including the Inland Empire and L.A. County.
The Inland Empire recorded the strongest rent growth and tightest vacancy in the nation in August — average industrial rents were up 6.6 percent year-over-year, and vacancy was just 1.2 percent.
Developers are keen to capitalize on demand in the Inland Empire. Around 22 million square feet is currently under construction, the third-highest total nationwide behind Dallas-Fort Worth and Phoenix, according to the report.
L.A. County vacancy rates were 3.2 percent in August and rents increased 6.5 percent year-over-year. L.A. has less developable land than the Inland Empire, making it difficult for builders to find suitable sites. Around 7.7 million square feet is under construction.
In total, around 500 million square feet of industrial space is under construction nationwide. A large chunk of that is under construction in Dallas-Fort Worth.
[CO] — Dennis Lynch