The industrial market in Los Angeles is the epitome of gilding the lily. Before the pandemic struck, Los Angeles was among the leading industrial markets in the country. Now, a new report from Marcus & Millichap predicts that industrial leasing activity will surpass pre-pandemic activity.
The forecast expects the industrial vacancy rate to drop 40 basis points this year, falling to 2.9%. Ecommerce growth from the pandemic along with record port cargo volumes and safety stock upgrades. As a result, Los Angeles will continue its reign as the market with the lowest industrial vacancy rate. At the same time, new construction activity is down from the five-year average. This year, 4.4 million square feet will delivery into the market, increasing the industrial stock by .5%. That is down by about 400,000 square feet from the five-year average. About 60% of the product under construction is already pre-leased.
Just as the availability of industrial space is falling, rental rates are rising significantly. Marcus & Millichap expects the average rent to increase 4.8% this year to $13.40 per square foot. Rental rates increased 3.5% in 2020, so this year’s gain surpasses that already significant gains in 2020.
The gains have already started. This year, leasing activity has totaled 3.7 million square feet in the first three months of the year. It was the highest leasing activity for a quarter in the last six years. Most of the leases were in the 10,000- to 50,000-square-foot size range, and demand has been concentrated in Lower San Gabriel Valley, Commerce Area-Vernon and Mid-Cities.
While an increase in online spending has boosted industrial demand across the country, Los Angeles also benefits from the two largest ports in the country. For the least year, the ports have had record cargo volumes. Activity has been so strong, it has created a bottleneck of goods coming from Asia. With the port’s peak season coming up, the Marcus & Millichap report predicts the cargo deliveries will create a tailwind for the local industrial market.
While industrial leasing has surged, investment sales have followed a different trend. In the first quarter, industrial sales declined by about 30%, according to a report from CommercialEdge. Transactions closed during the first three months totaled $8.1 billion across the US industrial markets compared to nearly $11 billion in Q1 in 2020. At the same time, the average price increased with the sale price per square foot for industrial space in March 2021 for the nation was 29.1% higher year-over-year. On average, US industrial assets traded for $110.04 per square foot last month.
"activity" - Google News
June 25, 2021 at 05:29PM
https://ift.tt/2UBrAtw
L.A. Industrial Leasing Will Top Pre-Pandemic Activity This Year - GlobeSt.com
"activity" - Google News
https://ift.tt/3ddCXMh
https://ift.tt/2WkO13c
Bagikan Berita Ini
0 Response to "L.A. Industrial Leasing Will Top Pre-Pandemic Activity This Year - GlobeSt.com"
Post a Comment