23Jan

The 4th quarter of 2023 Los Angeles - Long Industrial Real Estate Market Report.

1. Vacancy Rate Increase in South Bay Industrial Market: 

  • The South Bay Industrial market has experienced a year-over-year increase of 250 basis points in vacancy rates, reaching 3.9%.
  • This uptick suggests a change in the demand and supply dynamics within the industrial sector of the South Bay.

 2. Sublease Transactions in Industrial Leasing: 

  • Out of the 87 industrial lease transactions in the 4th quarter, 17.2% were sublease transactions.
  • The prevalence of subleases in the industrial sector underscores a strategic approach by tenants, potentially driven by the need to optimize existing space or adjust to evolving operational requirements.

 3. Tenant Responses to Scarcity in Industrial Spaces: 

  • Faced with continued scarcity, many industrial tenants in the South Bay have chosen to renew existing leases or implement efficiency measures within their current space.
  • This strategic response has contributed to a cooling effect on the market, leading to a 3.2% year-over-year decrease in industrial lease rates.

 4. Larger Decline in Industrial Lease Rates for Direct Spaces: 

  • The industrial lease rates for direct spaces have seen a larger quarter-over-quarter decline of 11.25%.
  • This pronounced decrease indicates heightened competition and negotiation dynamics in the industrial leasing market, likely influenced by increased vacancy rates and tenant strategies.

 5. Landlord Concessions in Industrial Leasing: 

  • The decline in industrial lease rates and the competitive landscape have prompted landlords to make some concessions to facilitate deals.
  • Concessions may include adjustments in terms, incentives, or other favorable arrangements to attract and retain industrial tenants.

 6. Industrial Sales Transactions: 

  • Industrial sales transactions have experienced a decline in the average number, dropping from a quarterly average of 20 to 13.
  • Additionally, both the average and median industrial asking sales prices have decreased quarter over quarter, reflecting a softening in the industrial sales market.

 7. South Bay Industrial Market Positioning: 

  • Despite the observed trends, the South Bay Industrial market remains 4.4% below the 20-year national average industrial vacancy rate.
  • The areas surrounding the port continue to be more optimal for most Industrial operations, indicating a sustained high demand in the foreseeable future.

 8. Additional Reports for Midcounties, Central (Los Angeles), and Inland Empire Industrial Markets: 

  • The report includes insights into the other industrial markets of Midcounties, Central (Los Angeles), and Inland Empire, providing a comprehensive view of the broader industrial landscape in the region.

In summary, the South Bay Industrial market is navigating through changes with increased vacancy rates, strategic tenant responses, and shifts in leasing and sales dynamics. Despite these trends, the market remains below the national average industrial vacancy rate, with certain areas, particularly around the port, expected to continue experiencing high demand. The inclusion of reports for other industrial markets enhances the overall understanding of the industrial real estate landscape in the region. If you have specific questions or would like to explore particular aspects further, feel free to let me know!

04Jan

The ±4,000 SF Industrial Warehouse Property at 6309 Alondra Blvd, Paramount is now available for lease.

• ±4,000 SF part of a Larger Building

• Gated Secure High Image Business Park

• 3 Ground Level Doors

• 18’ Clear Height

• 2 Bathrooms

• Zoning: M-1

• 200 Amps Power

• Minutes to 91, 710, & 105 Freeways

24Oct

The 3rd quarter, 2023 Los Angeles - Long Beach Industrial Real Estate Market Report shows an uptick in vacancy.

A prevalent and unifying trend has emerged in the industrial markets of Greater Los Angeles & Long Beach, Orange County, and the Inland Empire during the third quarter of 2023: an uptick in vacancy rates. This development has undoubtedly captured the attention of real estate observers, raising questions about the resilience of these markets amidst evolving economic conditions.

While it's true that asking lease rates and sale prices have moderated from their previous peaks, they continue to hover at historically elevated levels. This is particularly noteworthy in the realm of leasing, where the prevailing rates are higher than what has been observed in the past. The apparent contrast between increased vacancies and persistent high asking rates creates an intriguing narrative within these markets.

The question that naturally arises is whether this shift in vacancy rates is a direct consequence of the recent Federal Reserve interest rate hikes or if it's a temporary slowdown in the market's momentum. The answer to this query remains somewhat elusive, and much like the economic outlook itself, it is subject to ongoing observation and analysis.

One plausible hypothesis is that the impact of the Federal Reserve's interest rate hikes has yet to fully materialize. These hikes may have prompted businesses and investors to reevaluate their strategies, potentially leading to a pause in leasing and purchasing activities. The full ramifications of such monetary policy decisions often take time to ripple through the real estate sector.

On the other hand, it is equally plausible that the observed increase in vacancy rates is a transient phenomenon. Industrial markets are influenced by a myriad of factors, including supply and demand dynamics, economic cycles, and regional conditions. Short-term fluctuations are not uncommon, and they may not necessarily indicate a fundamental shift in the health of these markets.

As we move forward, close monitoring and analysis of these markets will be essential to provide a more definitive answer. Factors such as employment trends, trade activity, and consumer behavior will play a pivotal role in shaping the trajectory of these industrial markets. Whether the current situation is a harbinger of sustained change or a brief pause in the continued growth of these markets will be revealed in the coming quarters, offering valuable insights into the ever-evolving real estate landscape.

18Jul

The 2nd Quarter 2023 Los Angeles - Long Beach Industrial Real Esate Market Report

Every key metric typically used to measure the health of the economy is performing well right now. GDP grew by 2.0% in Q1, and it is estimated to grow by 2.3% in Q2 by the Atlanta Fed . In terms of employment, over the last year the U.S. added 3.8 million jobs and now has an unemployment rate of 3.6%. With regard to inflation, both headline and core inflation are
trending downward. The Consumer Price Index (CPI) rose by 3% year-over-year in June and 0.2% for the month, below consensus estimates of 3.1% and 0.3%. This was the lowest rate of inflation since March 2021. And core inflation, which excludes food and energy prices, rose by 4.8% year-over-year and 0.2% for the month. The annual core inflation level was
the lowest since October 2021, and its monthly gain was the smallest gain since August 2021.

Most economists, forecasters, and business leaders are anticipating that the Fed will continue to raise rates throughout the year until it reaches its target inflation rate. For this reason, most forecasters still believe a mild and shallow recession is likely within the next twelve months. However, a significant minority are anticipating that the US economy will avoid a recession altogether. For example, in its latest forecast, the National Association of Realtors has the economy growing slowly every quarter throughout 2023 and projects the economy to grow by 1.1% for the whole year. 

Regardless of one’s stance on this issue, it is indisputable that the industrial market is in a favorable position to weather most headwinds the economy might face. Total retail sales grew by 1.6% in May 2023 compared to the same period a year ago , and as a percentage of total sales, e-commerce retail sales (one of the key drivers of the industrial sector) now stand at 15.1% – 3.9 percentage points higher than where it stood at its peak prior to the pandemic in Q4 of 2019. With this said, available space continues to increase and there has been a growing sentiment regarding a shift in negotiating power from Landlords to Tenants

22Jun

The Industrial property at 16400 Garfield Ave in Paramount, CA has leased!

Large Fenced and Paved Gated Yard

Dock High Loading

14'-17' Clear Height

Free Standing Building

High Visibility

Close to 91 & 710 Freeways

16May

The 1st quarter of 2023 the Los Angeles - Long Beach Industrial real estate market saw its first material change in a long while.

For the first time in a long time a change in the market materialized in the 1st quarter of 2023 in the Los Angeles – Long Beach Industrial Real Estate Market.  It appears that lease rates may have hit their ceiling for now.  The level of leasing activity in Q1 of 2023 dipped to levels not seen since 2006.  Despite the drop in activity demand for Industrial space remains at top levels and a struggle between historically high rates and the need for space is likely to play out over the next 18 or so months.

14Feb

The Los Angeles - Long Beach Industrial Real Estate Market Report for the fourth quarter of 2022.

The Los Angeles industrial real estate market is one of the most active and sought after in the United States. It is a diverse market, ranging from smaller facilities to large, modern distribution centers. The demand for industrial space in Los Angeles has remained strong due to the city's strategic location, growing population, and thriving economy. The Los Angeles industrial real estate market has also benefited from the rise of e-commerce, as online shopping has led to an increased demand for warehouse and distribution facilities. While the COVID-19 pandemic has had an impact on many industries, the industrial sector has remained resilient, with strong leasing activity and a stable vacancy rate. Overall, the Los Angeles industrial real estate market presents many opportunities for investors, developers, and tenants alike. 

The Los Angeles industrial real estate market in the fourth quarter of 2022 was strong, with robust demand and limited supply leading to higher rental rates and lower vacancies. The e-commerce sector continued to drive demand for warehouse and distribution space. Overall, the market was characterized by a favorable balance between supply and demand, with positive outlook for the future.

26Oct

The Los Angeles - Long Beach Industrial Real Estate Market Report for the third quarter of 2022.

Q3 2022 saw the economy start to slow but Industrial Real Estate remain tight.

08Aug

The Los Angeles - Long Beach Industrial Real Estate Market Report for the second quarter of 2022.

Low vacancy and high demand continued to drive higher sales prices and lease rates.

27Jul

Now available for lease a ±27,750 SF building on a ±77,145 SF lot at 16400 Garfield Ave in Paramount, CA.

AVAILABLE: ±27,750 SF Bldg on±77,145 SF Lot

TERM: 3-5 Years

ZONING: M2

Large Fenced and Paved Gated Yard

Dock High Loading

Free Standing Building

High Visibility

Close to 91 & 710 Freeways

20May

The South Bay, Midcounties and Inland Empire all experienced further lease rate and sale price growth and demand continues to outstrip supply.

11Feb

The 4th quarter Los Angeles / Long Beach Industrial Real Estate Market experienced continued rising sale prices and lease rates.

The Los Angeles / Long Beach Industrial Real Estate market experienced more of the same, high demand and low supply.  Sale prices and lease rates for warehouses and industrial properties continue to set all time highs.  Click below for full report.