MARKET DRIVERS
INLAND EMPIRE remains one of the most sought-after markets for industrial space, attracting major ecommerce and 3PL companies looking to perfect their logistics channels. Major tenants that have continued their expansion throughout the market have included Amazon, TJ Maxx, Skechers, Uline Inc., and All Ways Logistics.
VACANCY LEVELS remained firm in 4Q20 despite current pandemic conditions, falling 100 basis points from the year prior, concluding at 3.3%.
DELAYS IN CONSTRUCTION DELIVERIES have occurred in 4Q20 with 2.7 million square feet being delivered. Currently, there are over 21.4 million square feet under construction with over 67% available for lease or sale. With minimal vacancies across the market, new projects are becoming pre-leased or leased within a couple months after completion
LEASING ACTIVITY decreased 6.84% year-over-year, reporting over 50.8 million square feet at the end of 2020. Yet, the Inland Empire Industrial market managed to recover from the slight pause in activity in 2Q20 due to the pandemic, growing a staggering 51%.
ECONOMIC REVIEW
The Ports of Los Angeles processed 889,746 Twenty-Foot Equivalent Units (TEUs) in November, accounting for a 22% increase from November 2019. The surge in cargo shipments have been correlated to a combination of recent holiday shipments, consumer expenditures, and warehouses replenishing inventories and storing safety stock.
As of November 2020, unemployment was at 7.9%, down 80 basis points from a month prior with construction and manufacturing jobs reporting job gains of 1,900 and 800, respectively.
NEAR TERM OUTLOOK
With Covid-19 hindering brick and mortar stores throughout the market in 2020, ecommerce sales experienced an acceleration, up 40.3% from the prior year. We anticipate ecommerce sales to further grow in 2021, thus driving demand fundamentals upward for warehouse space. Buoyed by limited inventory and new supply entering the market, rental rates should remain stable moving forward as tenants continue to compete for properties.