Mid Year Industrial Market Data Review
You'll enjoy the latest update with Jesse Gundersheim of CoStar who joined me on the latest episode of our Industrial Insights Podcast to review the data from the first half of the year. Major takeaways below. Watch , listen and download the slides here.
The Good
* Leasing volume jumped up in the Inland Empire * So Cal maintains the lowest market cap rates in the country. 4.6% in the Inland Empire, 5.2% in Los Angeles, and 5.3% in Orange County. * So Cal net absorption correlates with port import volumes which are up significantly. * US Retail good sales continue rising in line with long term trend * Institutional sales pricing down 6-14% * Cap rates continue to rise over $10 million dollars * Amazon is back with 3 seperate +1,000,000 SF leases in the IE. All 40' clearance warehouses or taller * Sublease availability declines in the IE for the first time in 2 years
The Bad
* Tenant's still face sizeable increases at lease renewal dispute todays market rates down from peak. Today's rates are 64% higher than a 10 year lease that is expiring today * Construction activity continues to fall with few starts in LA and OC. * Investment sales volume is still muted. We have not hit that inflection point at the bottom of the trough yet. * Logistics building availability rates - 12.3% in the Inland Empire, 8.4% in Los Angeles, and 7.7% in Orange County.
The Ugly
* Los Angeles has the worst fundamentals in the country right now. Rents have dropped 16%. They are still 33% higher than 5 years ago though. There has been 2,500,000-6,000,000 SF of negative net absorption 4 out of the last 6 quarters.
Podcast Episode
We have two new episodes for you with a third one coming this week:
Ralph Asher of Data Driven Supply Chain is first up. Ralph models supply chains for large corporates. He helps with expansion plans, consolidations, M&A activity and anything that involves needing the adjusting of supply chains. He can model your existing properties, inventories, transportation and then play out scenarios that optimize for cost reduction, faster delivery times, moving inventory closer to the customer, and moving to a 3PL. Watch or listen to the episode.
Michael Bucci is with Investing In Real Estate out of Montreal, Canada. We discuss what it takes to get started investing in industrial real estate and how he finds, underwrites and adds value to properties and his overall portfolio. Michael is energetic, sharp and has a keep eye for how to take an ordinary deal and create value with it. We talk about sale leasebacks, leasing while in escrow, and more. Watch or listen to the episode.
Next week we'll have an interview with Chelsea Levane of Cabot Properties. Cabot is a global institutional investment firm focused on industrial property. We discuss her rise to lead the west coast investment efforts, how her team runs their acquisitions process, and insights about how to do each step of the process best. Very insightful and I know you'll enjoy.
Call to Action
We are seeing increasing levels of activity as people start their 2025 budgets and try to get their 2024 projects across the finish line. Reach out to Grant, Chris, or me to discuss how we can start adding value for you today.
Best Regards,
Justin
Justin Smith, SIOR
jbsmith@lee (mailto:jbsmith@lee-associates.com) irvine.com (mailto:jbsmith@leeirvine.com?subject=Newsletter%20Follow%20Up)
949.400.4786
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