Strong Industrial Demand Pushes Asking Rates
- Net absorption posted a strong 782,400 square feet of positive net absorption this quarter, leading to a significant drop in the vacancy rate for the region.
- Industrial vacancy, which remains incredibly tight, fell 20 basis points to 1.3%. Asking rates fell to 3.0% and quality industrial space remains scarce in the region.
- Tight market conditions put continued pressure on asking rental rates, which have increased $0.03 per square foot (PSF) triple net (NNN) over the previous quarter to end at $0.92. Average asking rents in the South Bay remain the highest in all of Southern California, yet still have room to rise.
Rents are at their highest levels ever and will likely continue to increase as demand remains high and desirable industrial space remains scarce. Tenants may find some relief in the 1,972,600 square feet of space about to be delivered to the market. Of this amount, roughly one third is already pre-leased.
Land is incredibly scarce and many industrial users are having to get creative or face paying a premium to secure land for truck, car or trailer storage. Buildings with excess land are leasing at a premium in the South Bay industrial market.