Rents Continue To Rise As Vacancy Flattens
- Vacant construction completions coupled with space givebacks have led to a 20 basis point rise in the vacancy rate for the San Fernando Valley and Ventura County market.
- Asking rental rates have increased slightly to end the quarter at $0.80 per square foot (PSF) triple net (NNN). Rents remain at an all-time high and have well surpassed the previous peak of $0.68 PSF NNN seen in 2007.
- Net absorption was negative 122,200 square feet for the quarter with softening industrial demand across multiple size ranges. Industrial demand remains positive for the year at 407,300 square feet.
The San Fernando Valley industrial market is seeing a perfect storm as investors shift focus from lower yield core industrial assets towards value-add properties in secondary and tertiary infill markets.
Industrial users looking to find the ideal space to meet their needs will likely have to expand their industrial footprint by taking additional space in soon-to-be-constructed speculative buildings or in build-to-suit projects, as quality space remains hard to find in this market.