Industrial Insights - February 2024
Lease Comps
Recent market observations show several key trends:
- Properties between 100,000-300,000 SF in Inland Empire West and East regions are experiencing the most significant rate adjustments - Institutional landlords with low-basis properties are leading rent adjustments to maintain occupancy during the downturn - Some landlords are losing expected renewal opportunities due to increased landlord competition - Chasing declining market rates proves challenging as tenants pursue terms not yet reflected in comparable data - Tenants are extending negotiations anticipating further rate reductions - Shorter lease terms are becoming more common as tenants reassess their operational needs
Notable lease comps vary based on submarket location, property features, deal type, landlord cost basis, and broker representation.
Rexford Earnings Call Analysis
Rexford Industrial, the sole public REIT exclusively focused on Southern California industrial properties, shared significant performance data:
Strategic Performance:
The company demonstrated "an average annual FFO per share growth of about 15%" and achieved 98% occupancy in 2023 with consolidated NOI increasing by over 26%.
Leasing Results:
The firm completed 7.4 million square feet of leasing activity with "78% average net effective rent spreads" and over 4% embedded rent bumps.
Market Conditions:
The Southern California market maintained a 2.75% vacancy rate with stable pricing and accelerating port volumes at LA and Long Beach ports.
2024 Projections:
Management projects core FFO per share between $2.27-$2.30, with approximately $150 million in acquisition opportunities under consideration.
The company maintains a "low-leverage, investment-grade balance sheet" and announced a 10% dividend increase reflecting confidence in sustainable growth.
