Southbay Submarket Key Highlights (Download Report for Midcounties, Central & Inland Empire Submarkets)
- Vacancy/Availability
- Vacancy rate in Q4 2024 increased to 5.2%, up 80 basis points from Q3 and 130 basis points year-over-year.
- High-end properties linger on the market for an average of 7.2 months, giving tenants more leverage in negotiations.
- Total vacant available space expanded to 10.4 million square feet by the end of Q4.
- Rental Rates
- Average asking rents fell 1.2% ($0.02) quarter-over-quarter and 8.9% ($0.16) year-over-year.
- South Bay rents increased 34.1% between Q4 2020 and Q4 2024, reaching $1.63 NNN per square foot.
- Only 76 lease transactions were completed in Q4, well below the historical quarterly average of 105 transactions.
- Construction
- 1.37 million square feet under construction across 10 buildings in South Bay.
- Two new buildings totaling 263,060 square feet were added in Q4 2024.
- None of the 10 ongoing projects, including six exceeding 100,000 square feet, have been pre-leased, posing risks of higher vacancy rates.
- Leasing Activity/Absorption
- Net absorption in Q4 2024 was -1.47 million square feet, continuing a negative trend since Q4 2022 (except for Q3 2023 and Q3 2024).
- New leasing activity totaled 1.19 million square feet, well below the long-term quarterly average of 2.59 million square feet.
- Average time to lease a building in South Bay increased to 6.4 months.
- South Bay Submarket: Top Leases in Q4 2024
- 2027 Harpers Way, Torrance: Virco Manufacturing, 10/01/24, 559,000 SF.
- 24760 S. Main St., Carson: DCW, Inc., 10/22/24, 231,008 SF.
- 250 W. Manville St., Compton: Kair Harbor Express, 10/01/24, 206,483 SF.
- 2230 E. Carson St., Carson: JAM-N Logistics, 10/01/24, 198,292 SF.
- 18111 S. Santa Fe Ave., Rancho Dominguez: Air Products Manufacturing LLC, 10/01/24, 136,980 SF.
- Sales Activity/Investment Trends
- Q4 2024 sales volume reached $375 million across 14 transactions, up from $163 million in Q4 2023.
- Average price per square foot rose 36% quarter-over-quarter and 15.6% year-over-year, reaching $386.48.
- Capitalization rates increased 160 basis points to 6.0%.
- The Federal Reserve cut rates by 100 basis points in 2024, with further cuts expected in 2025.
- Investor activity remains cautious amid policy uncertainties.
- South Bay Submarket: Top Sales in Q4 2024
- 2501 Rosecrans Ave., Los Angeles: Rexford Industrial Realty, Inc., 12/06/24, 300,201 SF.
- 18500 Crenshaw Blvd., Torrance: Gpjco Properties LLC, 12/05/24, 180,269 SF.
- 2550 El Presidio St., Carson: Caroline Tseng, 10/31/24, 130,055 SF.
- 15914 S. Avalon Blvd., Compton: Access Services, 12/02/24, 75,431 SF.
- 14455 S. Broadway, Gardena: Aleah Miller, 11/27/24, 58,723 SF.
