Industrial Insights - September 2024
Mid Year Industrial Market Data Review
Justin Smith discusses findings from a CoStar analysis covering the first half of 2024, featuring insights on Southern California's industrial market performance.
The Good
Positive indicators include a surge in leasing activity within the Inland Empire and strong cap rate positioning for Southern California across all regions. Port import volumes continue climbing, supporting net absorption patterns. Amazon has resumed major warehouse leasing with three separate deals exceeding one million square feet, all featuring 40-foot or greater clearance. Sublease inventory in the Inland Empire declined for the first time in two years, signaling improving market conditions.
Institutional pricing has declined 6-14%, and US retail sales growth remains aligned with historical trends.
The Bad
Tenants face substantial rent increases upon lease renewal. Current rates run approximately 64% higher than rates from expiring ten-year leases. Construction activity remains depressed with minimal new starts in Los Angeles and Orange County. Investment sales volume remains sluggish, with the market not yet reaching its recovery inflection point.
The Ugly
Los Angeles experiences the nation's weakest fundamentals currently. Rental rates have fallen 16%, yet remain 33% above five-year-ago levels. The market has experienced negative absorption ranging from 2.5 to 6 million square feet during four of the last six quarters.
Podcast Episodes
Two recent episodes feature supply chain consultant Ralph Asher and real estate investor Michael Bucci. An upcoming interview with Chelsea Levane of Cabot Properties will address institutional acquisition strategies.
Call to Action
The newsletter invites readers to contact the team about 2025 planning initiatives.