Industrial Rents Climb 9 Percent in LA
Demand for yard space and trailer parking has been extremely competitive amid congestion at the ports and with holiday shipments on the horizon
It was another banner quarter for Los Angeles’ industrial market.
With high demand and little space available, asking lease rates climbed to another new all-time high, finishing the quarter at $1.14 per square foot, up 8.6 percent from the same period a year prior. All three quarters so far in 2021 have shown positive net absorption, and brokerage Kidder Mathews reported that a net 3.3 million square feet was leased between July 1 and Sept. 30, tightening the market to 1.4 percent vacancy in the third quarter.
More than 734,000 square feet of new industrial space hit the L.A. market in the third quarter, and 3.2 million square feet are currently under construction.
With record-breaking congestion at the Ports of L.A. and Long Beach, and holiday shipments on the horizon, demand for yard space has been extremely competitive, according to a Kidder Mathews report. Tenants are beginning to see little to no concessions and annual increases of 4 percent.
The average building sale price for L.A. was $248.94 per square foot. Through the first eight months of 2021, L.A. led the nation in sales at $2.8 billion. That includes big moves such as Oxford Properties paying $133.5 million for the 14-building Southern California Innovation Park.
Overall, any new construction is quickly absorbed in L.A., Kidder Mathews’ report explained. The firm expects the volume of renewals to increase as relocation options remain limited. Additionally, tenants might expect even fewer concessions, and rents will continue to rise at a rapid pace.
Gregory Cornfield can be reached at email@example.com.