Greater L.A. Hits Near Record Low Net Absorption
Key Takeaways:
- Vacancy rates increased 80 basis points to 3.0%.
- Net absorption recorded negative 7,182,100 square feet for the basin as infill markets showed strong declines. This is the first time in 10 years that net absorption has been negative for the Los Angeles Basin.
- Construction completions totaled only 5,298,500 square feet this quarter. This is below the five-year quarterly average, and construction activity is likely to remain subdued in future quarters.
- Average asking rental rates have increased $0.04 per square foot (PSF) triple-net (NNN) to $0.84 over the previous 12 months.
Los Angeles Basin Industrial Market:
The Los Angeles Basin industrial market is the largest in the United States, totaling more than 1.6 billion square feet. It has been characterized by some of the highest asking rates and lowest vacancy rates of any market in the nation.
The ongoing COVID-19 pandemic and subsequent economic shock continues to ripple through the local economy. While improving, the unemployment rate remains at an all-time high and businesses are adapting to an uncertain environment. This crisis is testing the resiliency of industrial users. In some cases, tenants are considering reducing their real estate footprint.
E-commerce has proven to be one bright spot for industrial as consumers have accelerated the trend of purchasing and receiving goods via non-store retailing.
