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Industrial Real Estate Trends, Greater Los Angeles

The Los Angeles industrial market had a very mixed second quarter. Although the area is showing a negative net absorption of 215,456 square feet of space, Los Angeles also had a significant amount of square footage enter the market during this period and saw some very large lease signings.

The industrial market experienced a negative net absorption of 215,456 square feet in quarter two, compared to a positive absorption of 1,403,546 in the first quarter. Flex office space experienced a positive net absorption of 112,076 square feet compared to 628,926 square feet in the first quarter. Warehouse space saw a negative net absorption of 327,532 square feet, compared to a positive net absorption of 774,620 during the first quarter.

Vacancy rates for industrial space increase a tenth of a percent to 2.3 percent in the second quarter. Flex space saw a decrease of three tenths of a percent to 4 percent available and warehouse space increase a tenth of a percentage point to 2.2 percent available.

During the second quarter seven buildings totaling 509,279 square feet were delivered to the market with over 6,846,668 square feet still under construction in the area. It is because of these new buildings being delivered that the market showed some increase in vacancy rates.

Rental rates increased during the second period across all sectors. Industrial space averaged $9.99, up .30 per square foot. Flex office space registered at $19.11, up .21 per square foot. Warehouse space averaged 9.30, up .32 per square foot.

Largest Lease Signings

McMaster-Carr signed a lease for a space consisting of 295,490 square feet. Best Buy took possession of a space 479,310 square feet at the new Brickyard. Pentair Pool Products signed a lease on a building consisting of 239,392 square feet.

Sublease space that is available increased to 1,787,765 square feet. This is an increase of over 250,000 square feet from the first quarter. Available sublease square footage in the Flex Space sector is 218,281 square feet. This is an increase of around 52,000 square feet. Warehouse space increased to 1,569,484 square feet available in the second quarter. This is up from 1,347,355 square feet available in quarter one.

First Quarter Sales Information

During the first quarter, Los Angeles experienced 90 closed industrial real estate transactions valued at $573,384,650. This is an average of $139.85 per square foot. Figures for first quarter 2016 reflect 93 transactions valued at $534,545,802 or $125.79 per square foot.

Considering the amount of square footage delivered to this area during the second quarter and the anticipated square footage being constructed, the overall market for Los Angeles remains very desirable and in high demand.


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

Data has recently been released for import activity at the Ports of Los Angeles and Long Beach. Information for January 2017 shows that imports are continuing to increase, despite anticipation of restrictions on imports or new taxation. The ports have reported a 10.6 percent increase in containers arriving during the month of January 2017 compared to the same month in the previous year. National data shows an overall increase of five percent for inbound shipments to all U.S. ports during January.

A strong dollar and cheap transportation is what is fueling the increase in imports. Demand for products is also increasing and consumer confidence is very high at this point in time. In fact, many observers are surprised at the high consumer confidence levels for this time of year when it is typical for consumers to be weary of spending after a prolonged holiday season.

Why This Is Significant Industrial Real Estate News

Consumer confidence and demand always impact the commercial real estate industry. Businesses will need to meet the demands of the consumer and this will occur by increasing their warehouse and distribution space. Warehouse sales Los Angeles are occurring at such a phenomenal rate that many properties are sold within hours of being made available for sale.

In 2016, the Greater Los Angeles area experienced nearly a zero percent availability for warehouses for lease in Los Angeles and warehouses for sale in Los Angeles. This zero availability included the absorption of 3.5 million square feet of newly constructed industrial space. Leasing increased significantly during this period with over 65 percent of all leased properties during 2016 being leased to e-commerce companies.

Demand for industrial properties during 2017 is anticipated to remain as high as it was in the previous year. Lack of space to build new warehouses and an excruciating permitting process for renovations or rebuilds of older properties will also impact the industrial market in Los Angeles. With fewer properties becoming available in 2017, those that do will be at much higher prices. In 2016, lease rates saw an increase of $3.54 per square foot in many areas, the highest increase in the country.

With import figures already showing a good start to the year, it is easy to anticipate that the demand for industrial properties within the Greater Los Angeles area will continue to be in high demand. Property demand in this area has always been partially linked to the success of each Port.

Source: Wall Street Journal

Q4 2016 Greater Los Angeles industrial real estate news has been released. The new data shows that there was a positive net absorption of 935,387 square feet of space during this quarter. This is very exciting industrial warehouse news for this area when you consider that over 1.6 million square feet of newly constructed space entered the market during this period and over 600,000 square feet were still under construction.

The overall vacancy rate for warehouses in Los Angeles CA increased to 2.56 percent during the fourth quarter. This is a significant increase when you consider that that the third quarter figures nearly registered at zero availability. However, due to the extensive construction completed during this quarter, the vacancy rate is still seen as very acceptable.

Warehousing and distribution in Los Angeles is very high in demand. Access to the ports, the international airports and other forms of shipping make this a highly desired location. However, space fills very quickly throughout the Greater Los Angeles area and square footage costs are significantly higher than those found in the nearby Inland Empire.

Fourth quarter data shows that industrial space rose to an average of $9.55 per square foot over the third quarter that registered at $9.47 for the same space. Warehouse costs increased to $8.85 per square foot, up from $8.78, and flex office space increased to $18.83, up from $18.66 in the third quarter. It is anticipated that square foot pricing will continue to increase throughout 2017.

Los Angeles Industrial Real Estate News

Warehouse sales in Los Angeles are expected to increase in 2017 as more of the newly constructed properties become available. Los Angeles warehouses for sale often move quickly off the market, and often for above asking price, due to the high demand and low availability of properties. Building restrictions and lack of space to construct new buildings make warehouses in Los Angeles CA almost a commodity in the industrial real estate market.

Warehousing and distribution in Los Angeles is expected to grow throughout 2017 as more companies convert to distribution type selling platforms. Consumers are shopping more on the Internet than in brick and mortar stores, and companies must meet this new demand to stay viable.

Every aspect of industrial real estate news for the Greater Los Angeles area, and the Inland Empire, reflect that distribution centers and warehouse structures are going to be the largest demand in the industrial real estate market during 2017. Businesses from around the world are aggressively seeking warehouse and industrial properties as they change their business structures to meet the increasing demands of Internet sales. because of this any warehouse sale Los Angeles or nearby area will be met with high demand.

Los Angeles warehouses for sale will also continue to demand top dollar per square foot as vacancy rates drop once again to the near zero or zero availability level. Even with new construction underway, the demand for properties in this area far outweighs the markets ability to fill this demand.
Industrial Real Estate News Warehouses Sale Los Angeles CA Q4

Industrial research has been completed and the figures for Q3 2016 for the Los Angeles industrial real estate market and the figures are very promising.

During the third quarter 1,194,190 square feet of positive net absorption, with the Northwest sector accounting for the largest portion of the square footage.
The industrial real estate market remains very active within the Los Angeles area, with over 6.5 million square feet of industrial construction currently underway in this area. Current industrial reports show that the new Brickyard project in Compton has been quickly filling, with UPS signing a lease for 525,000 square feet of space in this project during the third quarter.

High Demand Properties with Little Availability

Industrial real estate agents Inland Empire have found that the space available in the Los Angeles area is quickly filled and that the pricing is considerably higher than that found in the Inland Empire area. Investors and businesses have quickly been shifting their desired locations from the industrial marketplace of Los Angeles to the Inland Empire due to availability of properties as well as the reduced costs associated with leasing in this area.
Current industrial real estate trends point to a continued zero to one percent availability trend in Los Angeles commercial properties. Available space to build new commercial space is very limited and building regulations will continue to place a damper on new construction.

This is why it is typical for a California industrial real estate broker to encourage their clients to consider properties within the Inland Empire. Industrial real estate agents Inland Empire continue to show their clients how beneficial the Inland properties are and how it can reduce overall cost for the buyer or tenant. The industrial marketplace within the Empire will continue to grow because there is a lot of open areas where new construction can take place.

Properties within the Inland Empire offer businesses easy access to transportation and supplies as well as reduced cost per square foot in comparison to similar properties in the Los Angeles area. Many major retailers and supply companies have already transitioned their businesses into this area due to the prime location and affordable property prices.

current industrial marketplace research reports los angeles sales

Information Source: Los Angeles Industrial Real Estate Trends (Q3 2016). Source: xceligent

Figures for Q2 2016 for the Los Angeles industrial real estate market have been released. Current real estate trends for this area show almost a zero vacancy rate for the greater Los Angeles area.

Vacancy rates registered in at 2.1 percent. This is 10 points lower than the first quarter of 2016 and registers at a zero rate for available properties. At the same time, rents continued to increase in these areas with an average increase of over 12 percent from the previous year. The San Gabriel Valley area saw an increase of 19 percent just in the second quarter of 2016.

The current real estate trends in the greater Los Angeles area are pointing to a continued strain on available properties. Industrial real estate projects in Santa Clarita and South Bay are hoping to alleviate some of the strain for industrial real estate, but demand remains so high that these projects are sure to fill quickly once completed.

Industrial Warehouse Leasing & Sales Figures

Over nine million square feet of industrial real estate space was sold during the first half of 2016. This represents a decrease of 6.6 percent over the same period of the previous year. It is believed that this trend will continue as more investors opt to keep their commercial real estate space in this area because of the high demand by businesses.

Leasing figures for this area decreased by over 46 percent during the first half of 2016. This current real estate trend is also anticipated to continue for industrial real estate space in the greater Los Angeles area. Businesses that are securing spaces are signing leases that equal to 10 or more years, leaving turn over times very slow for the market.

As the current real estate trends continue to decrease in this area, more businesses are opting for space in the Inland Empire region of California. This area offers newer warehouse space that has easy access to the ports and railroad and is just located outside of the main Los Angeles area. Industrial real estate in this area is booming, and many larger businesses are moving their warehouses to this area for this reason alone.

Industrial Real Estate Outlook

The overall outlook for industrial real estate points to the Inland Empire area. Businesses will find access to larger buildings that can accommodate their growth, easy access to transportation, and lease and purchase rates that are lower than those found in the great LA area.

commercial industrial real estate warehouses greater los angeles q2 sales news infographics

Information Source: Los Angeles Industrial Real Estate Trends (Q2 2016), NAI Capital Commercial Real Estate, CoStar.