The Inland Empire and Los Angeles are the two strongest markets for industrial real estate in the country as well as lead for the first and second markets with the lowest vacancy rates respectively in the country. The vacancy rate for Los Angeles sits at 1.1 percent while the Inland Empire’s vacancy rate fell below 1 percent currently estimated at 0.8 percent making it the strongest industrial market in the nation. The demand for large logistics users has fueled the market and made development costs increase both due to increased land costs as well as construction and materials cost increases. The price for industrial buildings in the Inland Empire has increased by over twenty five per-cent estimated since April of 2021. Rents in the Inland Empire rose over twenty nine percent in 2021 landing at an average of $1.00 per square foot (PSF) on a NNN basis. Rents in the Los Angeles industrial market increased over twenty three percent which averaged at $1.28 PSF on a NNN basis.
The San Gabriel Valley industrial market has performed well keeping in line with the Greater Los Angeles industrial vacancy rate of 1 percent. There is currently 1.5 million square feet under construction. The average rental rate is $1.35 PSF on a NNN basis.
The Office Market
The Los Angeles office market has been in recovery mode in 2021 and continues stabilizing in 2022. The average vacancy rate increased to 19.7 percent due to new construction and sublease space brought to the market. The West Los Angeles market experienced the most significant recovery mainly attributed to entertainment, media and tech companies leasing large space. Continued worries over COVID and the new variant caused delays in many companies bringing their employees back to the office. There is close to 5M square feet currently under construction and scheduled to be delivered in 2022 which is expected to continue to increase the vacancy rate. Asking rent rates have not decreased dramatically, as many landlords have opted to provide concessions such as free rent, tenant improvement allowances or build-outs as a concession instead.
The San Gabriel Valley office market saw a slight increase in signed leases in 2021 from the effects of 2020. The vacancy rate is currently just above ten percent. The average asking rent is $2.38 PSF.
If you have any questions or would like assistance in navigating your property’s value, feel free to call me at 626-358-8287 or email Linda@TopComRealty.com