Industrial Rent Growth in Los Angeles
The economic upheaval stemming from the coronavirus pandemic has claimed roughly 700,000 jobs in Los Angeles. No corner of the county has been spared, but in the first three months of the pandemic, the local industrial market is holding up better than other commercial sectors.
The pandemic-induced shutdown has undoubtedly taken a toll on L.A. industrial properties, and the vacancy rate is up sharply since the start of the year. However, L.A. was the tightest major industrial hub in the nation prior to the outbreak, and the overall vacancy picture is still healthy. The L.A. industrial vacancy rate is about 3.5%.
After years of red-hot gains, rent growth is stagnating. The average industrial rental rate, at around $1.13 per square foot, was unchanged over the first half of the year. Annual rent gains peaked at nearly 9% in 2018, and were still at 5% last year, so the recent stagnation is a significant departure from the norm. However, it's an encouraging sign for the local market that rents are holding
relatively steady in the midst of the worst public health and economic crisis of our lifetimes.
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