Los Angeles Industrial Market Status
The Los Angeles Industrial Market received some bruises during the second quarter. Net absorption has now been in the red for three consecutive quarters. The vacancy is up 100 basis points from its recent low of late last year. Rent growth turned negative last quarter for the first time in 10 years.
As for Industrial Sales, dollar volumes (not dollar per square foot) are well below
historical averages. The Leasing Market didn't see Leasing activity slow to the extent seen across the office and retail sectors during the second quarter, but activity was below average. Gross Industrial Leasing activity was 75%-80% of what the market saw during 2017 through 2019. Not bad for being in the middle of a pandemic.
Our Industrial Market has felt the negative impacts of the pandemic, but the sector will likely remain the darling of commercial real estate for the foreseeable future. The structural factors that underpin demand for L.A. Industrial space are compelling, even in periods of economic turmoil. This contrasts with the office and retail sectors, which some think could be facing existential crises.