Q1 2021 Industrial Market Outlook – Los Angeles

LA County’s industrial market tightened up more, a year into the pandemic. Available
industrial space decreased 22% in Q1 2021 from Q1 2020, while the average asking rent
increased 4% to $1.04/SF triple net. The vacancy rate dropped 10 bps from Q1 2020 to
2.6%, as more than 5.6M SF of completed construction was added to the market. As the
economy began to reopen from the Covid-19 shutdown, soaring demand and rising rents
for warehouses motivated developers to bring new projects online in solid warehouse/
distribution markets. Compared to last year, industrial space under construction in the
South Bay, home of the ports of LA and Long Beach, jumped up 82%, and 32% in the
San Gabriel Valley.

The market saw a strong first quarter, with over 3.7M SF absorbed and little supply
added. The pandemic’s acceleration of ecommerce boosted demand for large distribution
centers, but the supply remained scarce. Over the past year only two warehouses larger
than 500K SF were completed, and both leased. The one project over 500K SF that’s
under construction already preleased. Currently, users looking for larger space go to the
Inland Empire.