Industrial Insights - January 2021: LA/OC/IE Newsletter
Market Overview
Southern California's industrial sector is positioned for robust growth in 2021, with consolidation and expansion opportunities across institutional and high-net-worth investor portfolios.
Los Angeles County
The LA market encompasses 938 million square feet, surpassing the Inland Empire's current size. Despite negative net absorption, the region demonstrated significant activity with "over 50 industrial leases in the last year that were over 150,000 SF."
2020 Performance:
- 4.9 million SF new construction - Negative 5.1 million SF absorption - 3.3% vacancy rate - 3.2% rent growth
Orange County
At 301 million square feet, Orange County features an unusual concentration of smaller owner-user buildings (3,000-10,000 SF), resulting in twice as many structures as comparably-sized markets. Rental rate growth has moderated compared to LA.
2020 Performance:
- 0.7 million SF new construction - 0.4 million SF absorption - 3.4% vacancy rate - 2.3% rent growth
Inland Empire
The region continues outperforming peers with strong fundamentals. "The delta between LA/OC and IE rental rates has never been closer," driven by consistent demand from 3PL operators, retailers, and e-commerce firms.
2020 Performance:
- 15.7 million SF new construction
- 21 million SF absorption
- 3.7% vacancy rate - 4.6% rent growth
National Market
Industrial property has become "the darling of the institutional and private capital markets with cap rates dipping below 5%." National construction and absorption totaled 310 and 191 million SF respectively.
New Listings
Three properties highlighted: - Santa Fe Springs: 11,050 SF freestanding warehouse with yard - Cypress: 29,179 SF consolidated headquarters for Mission Microwave - Costa Mesa: 5,774 SF freestanding industrial space with yard
Upcoming Initiatives
An upcoming book, Industrial Intelligence, and new podcast titled Industrial Insights will explore warehouse automation and multi-tenant industrial investment trends.