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.