Q4 2020 Industrial Market Outlook – Los Angeles

Los Angeles County’s industrial market is overcoming the effects of an economy that
spent the last three quarters of the year under a COVID-19 shutdown. In Q4 2020, the
average rent edged up three cents from the prior quarter to $1.03 NNN, up 4.0% from
Q4 2019. Vacancy remains extremely low at 3.1% – up only a fraction from the previous
quarter. Vacancy registered just 1.2 percentage points higher than its record low of
1.9% reached in Q1 2019. Highlighting the market’s strength in this pandemic-induced
economic recession, vacancy remains 2.5 percentage points below 2010’s all-time high,
which hit in the wake of the Great Recession. The exponential growth in demand for
ecommerce resulted in the industrial market not missing a beat during the shutdown.

Soaring demand for warehouse/distribution space created opportunity for infill
development. Completed construction in Q4 added close to 1M SF to the market. Since
Q1 2020, more than 5.4M SF was completed. Leasing volume continued at a steady pace
in Q4, up 7.1% from the previous quarter, taking the total for 2020 up 20.1% from 2019.
While sales prices per square foot climbed 27.8% year over year, total square footage sold
in 2020 declined 22.1% from 2019, symptomatic of the low supply and high demand for
industrial investments.