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Market Report

Los Angeles Industrial

Second Half 2019

Available Space Remains Scarce, Generating Stout Investor Demand for Assets Within Industrial Hubs

Moderate increase in vacancy is unconcerning as solid demand drivers persist. Entering this year, industrial vacancy sat at 2.1 percent in Los Angeles County, the lowest rate among major U.S. metros. While net absorption has softened slightly during the first three quarters of 2019, the result of limited available space, the presence of the nation’s largest manufacturing sector and busiest ports of entry maintains overall demand for industrial product, holding vacancy below 3 percent in most submarkets this past third quarter. Expanding third-party logistics companies and manufacturing firms establishing a local presence are partially to credit as these groups accounted for the largest leases so far this year. Solid demand stemming from company growth coupled with a subdued volume of supply additions this year will ensure that industrial fundamentals remain strong in the metro moving forward. Of the 3.7 million square feet slated for completion this year, two-thirds are located in either the San Gabriel Valley or South Bay, locales where speculative space should be absorbed in a relatively short time frame.

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