Rents Hit the Low $1.00's as Vacancy Tightens
- Average asking rents increased by $0.02 per square foot (PSF) triple net (NNN) to end the quarter at $1.01, the current high-water mark for asking rents in all of Southern California. Asking rents are likely to trend upwards, as the lack of supply creates demand.
- Despite rising rents, vacancy is higher than it was 12 months ago.
- Sales and leasing activity had strongly rebounded to a multiyear high of 3,610,200 square feet in 101 leases (2,820,700 square feet) and 16 sales (789,500 square feet).
South Bay Industrial MarketThe South Bay remains the premier market for distribution companies and cargo-centered sea-and-air industrial users. It is nearly fully developed, and industrial land is 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.
Between the 2019 trade war and the start of the 2020 pandemic, cargo volumes—a primary driver for the South Bay market—have plunged. However, the second half of 2020 significantly rebounded at the ports, with record-breaking numbers in November and December due to online shopping sales. This sudden reversal is leading to increased demand for container storage.