As we kick off the new year all signs point towards the industrial markets being full steam ahead for consolidation, rebound and continued growth throughout most segments of the industrial user base and amongst nearly all institutional and high net worth investors. Here is a brief market summary and report for the major So Cal industrial markets:
Los Angeles County (Market Report)
Don’t let the negative net absorption in the LA market fool you. There were over 50 industrial leases in the last year that were over 150,000 SF. What most people don’t know is that at 938 million square feet, the LA market is larger than the Inland Empire….for now.
2020 Highlights: 4.9 million SF of new construction, -5.1 million SF of absorption, 3.3% vacancy rate, 3.2% rent growth
Orange County (Market Report)
The OC market rental rates seem to have peaked a bit before LA’s in this cycle and are now escalating at a slower clip. At 301 million square feet, the OC market is unique in that it has the same total size of most secondary markets but twice as many buildings. This is due to its unusually large market for 3,000-10,000 SF small owner/user buildings for sale market.
2020 Highlights: 0.7 million SF of new construction, 0.4 million SF of absorption, 3.4% vacancy rate, 2.3% rent growth
Inland Empire (Market Report)
The Inland Empire industrial market continues to outperform in every way. The delta between LA/OC and IE rental rates has never been closer, the positive absorption by 3PL, retailers, e-commerce and PPE firms continues unabated and there continues to be a lack of available property even though the IE has one of the largest development pipelines in the country.
2020 Highlights: 15.7 million SF of new construction, 21 million SF of absorption, 3.7% vacancy rate, 4.6% rent growth
National Market (Market Report)
All of the trends discussed in the IE market section apply broadly across the United States. In the Capital Markets, industrial has become the darling of the institutional and private capital markets with cap rates dipping below 5% and no shortage of capital chasing too few deals.
2020 Highlights: 310 million SF of new construction, 191 million SF of absorption, 5.6%% vacancy rate, 3.4% rent growth
9401 Norwalk Blvd, Santa Fe Springs (Brochure)
This new listing is 11,050 SF, freestanding, and has a fenced yard. Few properties in Mid Counties can offer that for a small business warehouse location. The landlord currently uses the property and we are in the middle of finding them a new larger distribution center. We will be able to offer this within 90 days of lease signing.
6060 Phyllis, Cypress (Brochure)
We helped Mission Microwave consolidate their multiple Santa Fe Springs buildings into one larger 29,179 SF corporate headquarters. We found 60% savings over like-kind property in the Irvine Spectrum and a long term relationship oriented institution to partner with us to provide for a balanced long term lease here. Not only did we find them a great property and landlord, but we were also able to negotiate specialized tenant improvements for a lab and testing area.
935 W 18th St, Costa Mesa (Brochure)
This jewel box is 5,774 SF and one of those rare west side Costa Mesa industrial properties that is freestanding with a fenced yard. This can accommodate boats, high-performance vehicles, creative office uses, and more. The landlord here is a small mom and pop landlord looking for a long term tenant that is no-nonsense.
Industrial Intelligence: The Executive’s Guide for Making Informed Commercial Real Estate Decisions – The manuscript has been submitted to the publisher! It’s all about copy editing, proofreading, cover design, and interior design now. I’ll go into the studio to record the Audible audiobook next month. We should have a release date next week as well. Writing a book has been more fun and more collaborative than I had expected. Thank you for all your help in making it possible.
My team is launching a podcast this year titled Industrial Insights. We’ll use the podcast as a place to explore new ideas in warehouse automation, investment in multi-tenant industrial property, and other industry-related topics that can help executives continue to elevate their game. I’ll send the podcast player link in next month’s newsletter. Please let me know if you are interested in being a guest on the show or know someone who would be a good fit for this.
It’s time to make sure you have spent the month of January getting your 2021 plan firmly implemented. How can I be a resource for you? What real estate projects are important to you this year? Drop me a line and I’m happy to collaborate and help add value to your experience.