LOS ANGELES-A recent research report from CBRE shows Southern California industrial development in the third quarter has reached record levels since the recession, and is currently leading the industrial market. With 18 million square feet under construction, Southern California industrial development is twice that of Dallas and four times that of Chicago.
Leading the Southern California market, the Inland Empire has 13.9 million square feet of industrial development under construction with a 5.1% vacancy rate. At its height, in quarter four of 2007, the market had 19 million square feet under construction, before dropping dramatically in the first quarter of 2008 to 11.2 million square feet.
Los Angeles has 3.2 million square feet under construction and a 2.4% vacancy rate, which is about the square footage under development in quarter one of 2008. Before the recession, the market peak was 6 million square feet under construction.
Orange County has nearly fully recovered to pre-recession standings. With 978,000 square feet under construction and a 3.1% vacancy rate, the market is experiencing the most industrial construction it has since quarter three of 2006.
During Allen Matkins' recent View from the Top conference CBRE EVP Valerie K. Achtemeir discussed Southern California's very strong industrial market, GlobeSt.com reported in an earlier story. She explained, “We have seen very aggressive cap rates and really strong investor demand on the industrial side here in Southern California,” noting that it is a market that is often overlooked, but one that CBRE feels is a very strong and thriving market.
New projects are the cornerstone of this growth, and the development trend will continue so long as there is available land, according to Kurt Strasmann, CBRE senior managing director and leader of the Industrial Group in Greater Los Angeles and Orange County. “Within short order, the market will see additional very high-profile and significant new projects that will start construction in several of these markets. Moving forward many of these new developments will include both large buildings for lease as well as small and mid-size buildings for sale,” he says.
Some recent notable Southern California industrial transactions include the expanded lease of LA Specialty Produce for $26 million and DTC Industrial Trust's purchase of 45 acres in the Inland Empire.
GlobeSt.com will update this story as more information becomes available.
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Kelsi Maree Borland
