Rents went down for the first time in 10 years this past quarter. 3.9% to be exact. How temporary is this downturn in rents? 2020 is still forecast to have rent growth over 3% meaning positive rent growth in Q1, Q3, and Q4. From what I am seeing so far, I believe it. It seems that the industrial market has kept its momentum.
There are, however, more properties for lease, more subleases available, and I’m starting to see leasing incentives being advertised. That tells me that the solidly Landlord market has softened. I wouldn’t necessarily call it a Tenant’s market, but no doubt about it that the market has eased up a bit and there are pockets of opportunity in different size segments and submarkets.
This Industry Street listing is a new 46,363 SF sale opportunity for investors. This property has been leased to the same tenant since 2008, they own another similar property two miles away and there is a decent chance they will renew their leasing giving the investor 5.5 years of NNN rents. Asking $209 PSF / $9,689,867.
The Daimler Street listing is a 40,000 SF industrial property where 3M / Ceradyne has been located for years. This property was recently purchased by BLT Enterprises which is a local investment group that specializes in industrial property, studio space, and waste management facilities. We are planning to renovate the property to include the parking lot, landscaping, exterior, and interior improvements. Asking $1.20 NNN / $48,000 per month.
The Barton Circle listing is a sublease of a corporate client who has excess space to shed. The property is one of those rare corner lots that is freestanding and has dock-high loading. The building is super clean and recently vacated so it can be occupied immediately. The sublease price has yet to be determined but we are expecting to be in the neighborhood of $0.94 NNN / $8,707 per month.
The most useful part of this report is that you can zoom into one of 31 markets across the country to see what is happening there for industrial, office, and retail.
You can see on page 7 a running tally of the largest 40 deals that went down in the last 12 months throughout the county. One name you’ll keep seeing on there is Amazon as they plan on doubling their already incredibly large footprint throughout the US.
Literally, every investor and capital partner that paused during the first 90 days of the pandemic is active again and itching to find acquisition opportunities. If you have a warehouse that has 24′ clearance and dock-high loading, we should be talking.
This report is great for thinking the big picture, looking at investments in different markets, and starting new national tenant rep assignments. I like being able to take a cursory look at the top 100 industrial markets.
The Logistics of Leasing: A Tenant’s Handbook for Industrial Real Estate is in the hands of my editor right now. I’m working on the cover design now, will look for beta readers and blurbs from executives in two weeks, and then start in on the final edits before locking in the manuscript with the publisher. Then it is off to the studio to record the audiobook for Audible. I’m excited to get this out into the world in the hopes that it can help more people build and grow their businesses through warehouses.
What is your next project? How can I support you? I love talking with people about their plans and helping them turn them into reality. I’m happy to dig into a project with you and help add value in every way possible. Let me know what you have in mind and we can kick around some ideas.
Justin Smith SIOR
MBA MRED MCR
Senior Vice President / Principal
Lee & Associates / Irvine
Corporate ID 0104791 / License ID 01504494
9838 Research Dr.
Irvine CA 92618