THE LOS ANGELES industrial market displayed no signs of slowing down as user activity continued to increase throughout the metro. E-commerce and logistics remain a strong driver in user demand as FedEx, Furniture of America, and Polar Air were some of the top leases in the second quarter.
DEMAND FOR QUALITY industrial space has never been higher with properties continuing to receive multiple offers. Buoyed by limited vacancies across the metro, rental rates have pushed past historical highs, concluding the quarter at $1.11/SF NNN.
CAPITALIZING ON THE ROBUST DEMAND, some landlords have begun to adjust their lease terms. Tenants are beginning to witness lower concessions being offered and annual increases within 3.5%-4%.
NEW DEVELOPMENTS entering the market have picked up since the pandemic shutdown with over 780K SF completed in 2Q21. Currently, 2.9M SF remains under construction with over 1M SF approaching delivery in the third quarter. Developers have remained aggressive for new developmental sites as current land values are well above $100/SF.
THE LOS ANGELES COUNTY unemployment rate remained unchanged between April and May, holding steady at 11.1%. Job gains between April and May reported an increase of 41,000 jobs.
THE PORT OF LOS ANGELES reported the busiest month in May in the Port’s 114-year history, processing 1,012,048 TEUs, an increase of 74% from the year prior. This marks the first time a Western Hemisphere port has processed over 1M TEU’s in a month.
NEAR TERM OUTLOOK
THE LOS ANGELES industrial market will remain on firm footing moving forward as it continues its V-shape recovery. Overall, market demand has outpaced supply, and any new construction quickly becomes absorbed, keeping vacancies low. Tenants with real estate requirements will need to act quickly as the demand for quality industrial space will remain extremely competitive.