A Change of Pace for Los Angeles’ Industrial Market in Q3 2019

The third quarter marked a change of pace for Los Angeles County’s industrial market. Leasing and sales volume declined significantly year over year, down 44.6% and 40%, respectively. The average asking rent was flat over the prior quarter at $1.01/SF — still the highest on record. With vacancy at 2.3%, tenants are moving around the market as space allows. Developers had more than 5 million square feet under construction in an attempt to satisfy the demand for state-of-the-art warehouses. It is interesting to note that leasing volume this quarter (6.9 million square feet), while noticeably lower, remained above the construction volume. Investment sales over $2 million remained brisk, accounting for 3.4 million square feet of total sales volume. This quarter, the average sales price registered $201 per square foot with a 4.3% cap rate.