Industrial Insights - May 2024
Perspective
Southern California's industrial markets are experiencing divergent trends. The Inland Empire (IE), Los Angeles (LA), and Orange County (OC) markets each follow distinct trajectories based on local dynamics.
Market metrics vary significantly by subregion. The IE faces substantial vacant properties, with multiple million-square-foot assets changing hands quarterly. In contrast, OC would require approximately 40 smaller deals to match one million-square-foot transaction's impact on vacancy figures.
With limited new construction in development pipelines, investors increasingly anticipate future advantages. "Now is the time that a lot of investors are thinking that they will be heros in a few years when we work through the inventory" as supply constraints create upward pricing pressure.
The region simultaneously exhibits both strongest and weakest market conditions across the country within the same geographic area, with the IE and LA/OC representing opposite ends of market health metrics.
Lease Comps
Recent lease transactions demonstrate ongoing market activity. The report indicates lease comparables from the preceding 30 days, with expectations that Class B and C buildings in IE supply-saturated areas will soon achieve sub-$1.00 per square foot pricing.
Sale Comps
Owner-occupants have substantially returned to purchasing. Recent transactions exceeding 10,000 square feet occurred throughout the period. Additional deals under 10,000 square feet ranging from $350-$1,000 per square foot are available upon request, depending on location and orientation. Investors increasingly explore off-market opportunities with compelling economics.
Contact
Justin Smith, SIOR
949.400.4786
jbsmith@leeirvine.com