Vacancy Rises On Vacant Construction Completion
- Industrial vacancy, which remains incredibly tight, rose 10 basis points to 1.4% this quarter. This was due to the completion of a vacant 411,800 square foot building.
- Net absorption was positive 239,600 square feet this quarter as industrial demand remains high. Sales and leasing activity was also strong this quarter with gross absorption totaling 1,745,100 square feet.
- Asking rents have remained unchanged over the quarter to end at $0.92 per square foot (PSF) triple net (NNN). Average asking rents in the South Bay remain the highest in all of Southern California.
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 new supply once it is delivered to the market. Of the space currently under construction, roughly 40% 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.