Q3 2019 Southern California Industrial Market Outlook

The overall vacancy rate for industrial space in Southern California was 3.2%, up only 10 bps from the prior quarter and from the same period a year ago. Despite significant construction added to the inventory in most markets, vacancy has remained unchanged, declined or marginally increased as the new industrial space came online over the past year.

Demand for industrial space continues to be driven by a strong economy, consumer spending, and ecommerce. However, total combined imports and exports at the Ports of LA and Long Beach, which is a key indicator of demand for warehouse space in the region, declined by 4.6% in September 2019 from September 2018. The trade war with China is impacting cargo volume. With a prolonged trade war, vacancy rates could be affected along the Ports’ path.