INCREASES in user activity that started in the second half of 2020 has carried over into 2021 with logistic companies remaining the most active. Major tenants such as Starship Logistics, FNS, and JCR Logistics rounded some of the top leases.
DEMAND for spaces with truck yards and low coverage sites has become extremely competitive with a limited number of availabilities hitting the market each month. In fact, some rents for yard space have reached up to $0.50/SF NNN.
AFTER REPORTING relatively flat rent growth in 2020, minimal vacancies and robust demand have pushed rental rates up by 3.88% from the year prior, concluding at $1.07/SF NNN.
OVERALL sale prices remain at all-time highs as sellers remain unwilling to negotiate on pricing. Owner/users with certain size requirements such as 20,000 SF-50,000 SF have been left with little options as neighboring markets have been just as competitive. The first quarter reported an average sale price of $215/SF with cap rates at 5%.
THE LOS ANGELES COUNTY unemployment rate decreased to 11.5% in February, down from a revised 12.6% from the month prior. Job gains between January and February reported an increase of 47,900 jobs.
THE PORTS of Los Angeles reported the strongest February in the Port’s 114-year history, processing 799,315 TEUs, an increase of 47% from the year prior. The surge of shipments through the port and fewer workers on the floor due to Covid have caused delays, pushing processing times from an average of two days to more than eight days.
NEAR TERM OUTLOOK
THE LOS ANGELES industrial market has remained resilient post pandemic. Market demand continues to outpace supply and any new construction quickly becomes absorbed, keeping vacancies low. Furthermore, this highly competitive market will set rent growth on firm footing as it is expected to approach 5%–6% annually.