Year Ends With Strong Positive Absorption
- Net absorption was positive 810,100 square feet this quarter due mostly to fully leased newly completed projects. Net absorption finished the year strong with 1,978,300 square feet of absorption for 2019.
- Industrial vacancy, which remains incredibly tight, rose 10 basis points to 1.4% this quarter, due to vacant construction completions.
- Asking rents increased by $0.02 per square foot (PSF) triple net (NNN) to end the year at $0.94. Average asking rents in the South Bay remain the highest in all of Southern California.
South Bay Industrial Market:
The South Bay remains the premier market for distribution companies and cargo-centered sea-and-air industrial users. It is nearly fully developed, making land incredibly scarce. Tight market conditions and a lack of larger modern space continue to be deterrents that drive tenants to neighboring markets, primarily to the east.
- Rents are at their highest levels ever and will likely continue to increase as demand remains high and desirable industrial space remains scarce. Tenants will find little relief in the newly constructed space, much of which was pre-leased prior to completion. Tenants looking to expand have limited options and quality industrial space will attract multiple offers, assuming it gets listed on the open market.
- 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.