Needed in L.A.: Added Industrial Sites

Los Angeles County is poised to continue its economic resurgence into the next century except for one very significant constraint: our debilitating lack of suitable buildings and developable land to meet the needs of industrial companies.

Why should we care about this situation? A vibrant and expanding economy driven by a robust and growing industrial sector requires new plants and plant sites to accommodate the rapidly changing requirements for the manufacturing, logistics, technology and assembly industries. And, the key result of an expanding industrial sector for Los Angeles County and its citizens is new and higher-paying jobs, and the myriad direct and indirect benefits that result.

We need new buildings and sites to satisfy this long-term need.

According to Grubb-Ellis, our county’s industrial vacancy rate is now at an all-time low, around 5%. Despite 8 million square feet of uncommitted new industrial space under construction, we will have virtually no vacancy to speak of just beyond the turn of the century. Here’s why: With about a 40-million-square-foot annual absorption rate, coupled with approximately 50 million square feet currently vacant, plus the new construction this year of 8 million square feet, only 18 months of standing inventory will be available by the year 2000. And to make satisfying the demand even more difficult, 80% of our 850 million square feet of existing industrial buildings is more than 20 years old and is fraught with functional obsolescence, design inadequacies, environmental problems and structural deficiencies. Job expansion, business expansion, falling vacancies, limited new construction and an aging industrial building base are the powerful forces that are at play.

The future of Los Angeles County is a very bright one, but we now need to address our shortage of industrial land and buildings. It can be argued that in the years ahead, we will need to build at least 40 million square feet of new industrial buildings a year to satisfy the current and anticipated level of demand. This means at a realistic land-to-building-coverage ratio, we need to create or recreate 2,100 acres of industrial land per year to accommodate these buildings. Obviously, our current 8-million-square-foot and 420-acre annual production pace falls far short of serving the needs of industry.

Given the constraints mentioned and the fact that there are no large tracts of undeveloped land like the Inland Empire enjoys, the current pace of new construction in the Los Angeles basin cannot be significantly increased without a new approach to dealing with this serious problem.

The effort to satisfy future demand and accommodate job growth cannot be solved by the private sector alone. What is it going to take?

First, this problem must be recognized as a very serious one by the political leadership of both Los Angeles County and the 88 cities that comprise it. Then, we need to create a collaborative public and private sector effort to solve it. We need to embark on a massive and widespread replanning, rezoning and redevelopment effort throughout Los Angeles County and its cities to accommodate the needs of an expanding industrial sector.

We need to recognize the importance of industry as a creator of good middle-class jobs and begin assembling land in meaningful sizes suitable for quality industrial development. The first target could be land in the cities abutting the Alameda corridor where some of our oldest and most underutilized industrial facilities are located.

Successful reuse of this land would generate quality jobs and a sound economic base that would stimulate new opportunity for much of our inner-city area.