DIRECT NET absorption in 1Q 2022 reported negative with 127,205 SF. Although this marks the first-time absorption has fallen into the red since 4Q 2020, direct vacancies remain at a historically low 1.1%.
COMPETITION for industrial space has never been higher. Lack of available options, rapid growth of ecommerce and logistics, and tenants looking to perfect their logistical channels have caused competition for available space to spike. Rental rates concluded the quarter at a new all-time high of $1.38/SF on a triple net basis, a 6.15% increase quarter-over-quarter.
THE COMPETITION for industrial land has also been on the rise as truck terminals have been in high demand. The surge in demand for any available industrial land has pushed land lease rates north of $1.00 SF triple net.
OVER 439K SF WAS DELIVERED in 1Q 2022 with 3.5M SF currently under construction. Due to the lack of developmental land, developers have remained aggressive for renovation and repositioning projects which have pushed land values over $120/SF.
THE LOS ANGELES COUNTY unemployment rate increased by 20 BPS from the month prior to 7.0% in January 2022. Job gains between December and January decreased by 75,100 jobs.
THE PORT PROCESSED 857,764 TEU’s in the month of February, a 7.3% increase compared to the same time last year.
NEAR TERM OUTLOOK
DEMAND FOR INDUSTRIAL SPACE will remain extremely competitive and landlords will look to capitalize on pricing as the market continues to report new all-time highs. Rental rate growth is forecasted to be between 10%-15% in 2022. With limited options across the metro and space commonly leased a year in advance, we can expect the volume of renewals to increase in the following quarters.
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