Muoio: The L.A. industrial market compares favorably to Inland Empire according to our data, though this is more a reflection of LA's strength, as the Inland Empire market is also seeing solid growth. LA industrial vacancies measure just above 3%, compared to near 7% for the Inland Empire, while rent growth in LA is trending in the mid-3% range per year over the last few years while Inland Empire rent growth is slightly slower, near 3%.

GlobeSt.com: Industrial can be a broad term. Which industrial property types are better or safer “buys” for investors, and is there any industrial product in L.A. that investors should avoid?

Muoio: Every investor has unique needs and requirements for their portfolio, so it is hard to give a broad generalization as to 'safer' buys. I will say however, that trade through the port locally, and the rise of e-commerce nationally have been the real demand drivers for absorption in this market, so we would look towards properties that will be able to benefit from these phenomena.

GlobeSt.com: Rents have increased so dramatically. How much more can landlords push rents for industrial product in these markets? Do you expect rents to continue to increase?

Muoio: Rents have seen strong growth, but given that vacancies in the market are so tight and we expect them to remain so, rents should continue to see robust growth. As long as the US and global economy remain in expansion mode and fuel industrial absorption, rents should continue to rise at a rapid pace. We expect rent growth in excess of 4% per year in the coming years.

GlobeSt.com: Does receiving a “buy” ranking like this change the investor pool in a market? Should we expect to see industrial ownership become more institutional, and if so, what does that change mean for this market?

Muoio: It's hard to say whether enough investors utilize to our rankings for them to make an impact like that, but given the mature, tight nature of this market we would expect investors looking for consistent cash flow, such as REITs, to be more attracted to this market. Equity and opportunity funds, on the other hand, might look at markets that have a greater chance for occupancy improvement and higher return on capital.

LOS ANGELES—Los Angeles is a top-buy market for industrial real estate, according to a new industrial report from Ten-X, an online real estate transaction marketplace. The city was notably names as the number-two buy market in the country, with rents up 10.6% and vacancy rates down 90 basis points, a nearly impossible feat considering vacancy rates are already at historical lows in Los Angeles. Nashville snagged the number-one slot on the list, while Los Angeles was followed by Memphis, San Bernardino and Atlanta. To find out more about the ranking and why Los Angeles is such a great investment market for industrial, we sat down with Chris Muoio, senior quantitative strategist at Ten-X, for an exclusive interview.

GlobeSt.com: Why is L.A. a strong buy city? What are the underlying fundamentals here that are so strong?

Chris Muoio: L.A. is a strong buy industrial market because of its tight vacancy rate. Vacancies have measured just above 3% for over a year now, and this extremely low availability is driving strong rent growth, which has averaged in the mid-3% range per annum over the last few years. The market is seeing such tight vacancies because trade through the Port of LA is extremely robust. This is fueling demand for warehouse and distribution space and keeping the market tight.

GlobeSt.com: How does L.A. compare to industrial markets in the Inland Empire, which is known for being a hot industrial market?

Muoio: The L.A. industrial market compares favorably to Inland Empire according to our data, though this is more a reflection of LA's strength, as the Inland Empire market is also seeing solid growth. LA industrial vacancies measure just above 3%, compared to near 7% for the Inland Empire, while rent growth in LA is trending in the mid-3% range per year over the last few years while Inland Empire rent growth is slightly slower, near 3%.

GlobeSt.com: Industrial can be a broad term. Which industrial property types are better or safer “buys” for investors, and is there any industrial product in L.A. that investors should avoid?

Muoio: Every investor has unique needs and requirements for their portfolio, so it is hard to give a broad generalization as to 'safer' buys. I will say however, that trade through the port locally, and the rise of e-commerce nationally have been the real demand drivers for absorption in this market, so we would look towards properties that will be able to benefit from these phenomena.

GlobeSt.com: Rents have increased so dramatically. How much more can landlords push rents for industrial product in these markets? Do you expect rents to continue to increase?

Muoio: Rents have seen strong growth, but given that vacancies in the market are so tight and we expect them to remain so, rents should continue to see robust growth. As long as the US and global economy remain in expansion mode and fuel industrial absorption, rents should continue to rise at a rapid pace. We expect rent growth in excess of 4% per year in the coming years.

GlobeSt.com: Does receiving a “buy” ranking like this change the investor pool in a market? Should we expect to see industrial ownership become more institutional, and if so, what does that change mean for this market?

Muoio: It's hard to say whether enough investors utilize to our rankings for them to make an impact like that, but given the mature, tight nature of this market we would expect investors looking for consistent cash flow, such as REITs, to be more attracted to this market. Equity and opportunity funds, on the other hand, might look at markets that have a greater chance for occupancy improvement and higher return on capital.