Results for industrial real estate in Los Angeles for Q1 2017 have recently been released. Figures show an overall promising look for the coming year for all types of commercial real estate structures. Overall, the Los Angeles area closed the first quarter with a 2.2% vacancy rate in the commercial real estate sector. This percentage shows no change from the previous quarter.
Q1 2017 saw a positive net absorption of 1,502,099 square feet of space across the board. This figure is double the net absorption rate for the first, third and fourth quarters of 2016 and exceeds the Q2 2016 figure of 1.4 million square feet. Demand remains exceptionally high throughout the greater Los Angeles area for available commercial properties.
Warehouse space has been in the highest demand in this area for the last six quarters. Net absorption for warehouse space during Q1 2017 registered at 942,362 square feet of space, and available properties registered at only 2%. Flex office space only saw absorption of 62,702 square feet of space during the first quarter and vacancy rates are registering at 3.9%. However, Flex space vacancies were at 4.2% at the end of Q4 2016.
Prices Continue To Rise
Your average warehouse for lease in Los Angeles saw an increase of .15 per square foot to an average of $9.00 during the first quarter. Flex office space saw a smaller increase of only .04 per square foot, with the new average cost now registering at $18.89 per square foot. Although these are small increases in square footage pricing, it shows that demand remains high for properties in this area.
Los Angeles warehouses for sale were achieving much higher square footage prices. Results have been released for Q4 2016 and the figures are impressive. During the fourth quarter, 110 structures were sold consisting of 5,812,580 square feet of space. The average cost for Los Angeles warehouses for sale during this period was $145.20 per square foot, up from $130.50 in the third quarter.
Outlook For Remaining Three Quarters
Every indicator is showing that commercial properties in Los Angeles are going to remain in high demand for the remainder of the year. Limited available space for new construction will continue to cause prices to rise on available properties, and more long-term leases will be given to companies that wish to secure their company in this area.
Finding a warehouse for lease in Los Angeles may become more difficult as time progresses due to the transition of many large corporations into Internet sales. Many larger companies are converting their sales structure to accommodate Internet based sales instead of brick and mortar storefronts. This conversion is leading them to secure more warehouse space as distribution centers and less mall space.
Los Angeles and Long Beach are the two busiest ports in the United States. Access to these ports is what drives many companies to this area. Businesses of all sizes and from all industries who wish to secure industrial space within Los Angeles will need to work with a professional commercial real estate company to ensure that they can secure the building they need as soon as a property becomes available.
Sources: CoStar 1st Quarter 2017, Xceligent 1st Quarter 2017