The industrial markets are at their peak level of activity thus far in 2020. Key market stats that I found eye opening and think you will too:
YTD Transactions by Industry
Third-Party Logistics – 27.8%
E-commerce – 23.8%
General Retail & Wholesale – 19.4%
Food & Beverage – 7.6%
Undisclosed – 5.6%
Manufacturing – 4.8%
Automobile, Tires & Parts – 4.3%
Building Materials & Construction – 3.5%
Medical – 3.2%
Current 5 Year Rent Growth Projections
Los Angeles – 40.6%
Orange County – 33.0%
It’s hard to imagine rent going up by those levels in Southern California by that amount but the morale of the story is that there is no blood bath in the industrial markets and that rents are going to continue to grow.
Prop 15 California Ballot Initiative
Prop 15 is on everybody’s mind. The split roll tax representing a repeal of Prop 13 tax protection for commercial property owners. The initial thought from the real estate community is that the impact of this is not known to the public that most real estate property taxes are pass-through expenses to end-users who are the tenants who pay the rent and as a result will have a larger reason to downsize, outsource, relocate out of state or automate. But that is just the first glance. Here is our report to break down some of the pros and cons of the ballot measure.
This investment sale initially had one year of lease term left at $0.62 NNN. We were able to negotiate an early lease renewal at $0.86 PSF NNN for the next five years with 3% annual increases.
This 25,300 SF industrial property is available for sublease and is part of a client’s expansion in the Mid Counties market. We have term left until April 2021 so we can accommodate a short term storage requirement or parlay the sublease into a new longer 5-year term as needed.
This 33,800 SF industrial property is available for lease with an initial commencement date target of 01/15/2021. The building is going through a large scale renovation whereby we will be replacing the roof, seismic retrofit, building new office, ADA restrooms, new parking lot and more.
We are grateful to represent PH Dental in the expansion of its operations into 26,506 SF for the next 7 years. We were able to help guide them through the Orange County and Inland Empire West marketplaces to find the right fit to fulfill their quest to expand and manufacture PPE equipment locally.
The most useful part of this report is that you can zoom into one of 31 markets across the country to see what is happening there for industrial, office, and retail.
You can see on page 7 a running tally of the largest 40 deals that went down in the last 12 months throughout the county. One name you’ll keep seeing on there is Amazon as they plan on doubling their already incredibly large footprint throughout the US.
Literally, every investor and capital partner that paused during the first 90 days of the pandemic is active again and itching to find acquisition opportunities. If you have a warehouse that has 24′ clearance and dock-high loading, we should be talking.
This report is great for thinking about the big picture, looking at investments in different markets, and starting new national tenant rep assignments. I like being able to take a cursory look at the top 100 industrial markets.
The Logistics of Leasing: The Tenant’s Playbook for Industrial Real Estate is back from my editor right now. I’m looking for beta readers that can help provide feedback for how I can deliver the most value to executives of manufacturing, distribution, and life science companies. Raise your hand and let me know if you would like to participate.
Also, I’m working with supply chain and warehouse automation consultants to better articulate how they can help clients grow as part of the book. Do you have any favorite contacts in those two worlds that you can share with me? I’m all ears and appreciate your help!
What is your next project? How can I support you? I love talking with people about their plans and helping them turn them into reality. I’m happy to dig into a project with you and help add value in every way possible. Let me know what you have in mind and we can kick around some ideas.
Justin Smith, SIOR
MBA, MRED, MCR
Senior Vice President | Principal
Lee & Associates | Irvine
Corporate ID 0104791 | License ID 01504494
9838 Research Dr.
Irvine, CA 92618