SoCal Industrial Vacancies Drop to New Low
According to a new report shared by NAI Capital, companies signing new leases have been hit the hardest by the shortage of industrial space. In the first quarter of 2022, the regional average asking rent in Southern California reached a new high, climbing 25% on an annual basis. The median sales price soared 31.9%.
Here’s a year-over-year preview of vacancy, average rent, and median sales price by region.
Los Angeles County
In Los Angeles County, vacant industrial space declined 49.2% from the first quarter of 2021, with rent increasing 28.8%, the fastest in the region, to a market average of $1.34 per square foot per month on a triple net basis. The median sales price registered $270 per square foot, up 18.4% year over year.
Vacant industrial space in the Inland Empire fell 58.5% from last year, with asking rent rising 13.3% to a market average of $0.85 per square foot. The IE experienced the highest sales price growth rate in the region. The median sales price registered $257 per square foot, up 51.5% year over year.
Vacant industrial space in Orange County saw a 44.1% reduction from last year, while asking rent climbed 16.8% to a market average of $1.25 per square foot. Orange County commanded the highest sales price per square foot for industrial space in the region. The median sales price registered $350 per square foot, up 47.1% year over year.
Ventura County held the lowest amount of vacant industrial space in the region. With a 0.9% vacancy rate, there is virtually no vacant space in Ventura County. Compared to last year at this time, vacant industrial space in Ventura County plummeted 63.7%. Asking rent noted a 26.8% increase to a market average of $0.90 per square foot. The median sales price registered $160 per square foot, up 2.8% year over year.
The severe shortage of industrial space has developers scouring the region for land or obsolete buildings to raze and build modern warehouse distribution facilities. The price of land is skyrocketing, with a whisper price as high as $140 per square foot for infill land.
Industrial space under construction in Southern California increased 27.8% year over year, as development continued its move further east into the Inland Empire. Close to 50% of the 32.1 msf under construction in the Inland Empire happened in the East submarket. The Inland Empire represented 80% of the 41 msf of industrial space under construction in Southern California.
As of the first quarter of 2022, the regional average for industrial space stood at $1.25 per square foot per month on a triple net basis. Vacant industrial space in Southern California tumbled 52.7% from the first quarter of 2021. The median sales price registered $265 per square foot, up 31.9% year over year.
The dearth of industrial space and developable infill land in Southern California will make it extra competitive for developers, businesses, and investors wanting industrial space.