The Los Angeles - Long Beach Industrial Real Estate Market Report for the 2nd Quarter of 2024.
- Leasing Activity: 2.3 million square feet (MSF) of industrial space leased this quarter, up by 1.03 MSF from the previous quarter.
- Vacant-Availability Rate: Dropped by 0.4% from last quarter to 4.2%, but still 2.8% higher than last year.
- Market Trends: Increase in vacant-available space due to tenants returning unused space since 2023.
- Asking Lease Rates: Declined to $1.71 (direct) and $1.68 (overall) per square foot (PSF), though still 40%+ higher over the last five years. Class A spaces aim for $2.00+ PSF.
- Tenant Behavior: Tenants are more selective and pushing for rental concessions, with landlords becoming more negotiable.
- Net Absorption: Positive for sublet space (525,417 square feet) but overall net absorption negative at -539,467 square feet.
- Sales Volume: $51 million across 9 transactions in the South Bay, with average building prices at $288.61 PSF and land values at $143.79 PSF.
- Capitalization Rates: Increasing due to higher capital costs, forcing sellers to adjust prices.
- Interest Rates: Around 6.5% for fixed, 25-year owner-occupier loans.
- Insurance Challenges: Rising premiums and providers exiting the California market.
- Property Values: Some industrial areas affected by homelessness and vagrancy, impacting property and rental values.
