IRVINE, CA—More than half of new spec industrial construction is leasing or selling before walls are tilted, and some larger projects are leasing off of the plans before construction begins, JLL's senior managing director Louis Tomaselli tells GlobeSt.com. With the ever-tightening vacancy in this sector continuing to make headlines, we spoke exclusively with Tomaselli about the most interesting industrial trends he saw in 2015 and what he expects to happen with the sector in 2016.

GlobeSt.com: What was the biggest surprise that came from the industrial sector in 2015? 

Tomaselli: The biggest surprise was how quickly the low vacancy rates and diminishing inventory really created pressure on tenants to expedite decisions. We saw many tenants missing their first or even second choice as other tenants moved faster in the negotiation process and were willing to bring more certainty of close so that the landlord would choose their transaction over the competing transaction(s). We had not seen this kind of multiple-offer bidding pressure since the previous peak market in 2007, and vacancy rates are at or even below the previous historical lows of 2007.

GlobeSt.com: What new trends do you see emerging in industrial for 2016? 

Tomaselli: We're seeing no published ask rate in MLS and verbal rate-range quotes from landlords and agency brokers so that they can take advantage of the escalating lease-market rates, especially on new-building construction being delivered for six to 12 months out. We are seeing more than half of new spec construction leasing or selling before walls are tilted and in many larger 100,000-square-foot-plus spec-building projects, buildings leasing off of the plans prior to commencement of construction.

GlobeSt.com: In light of the dearth of land available to build industrial properties in Southern California, how do you see developers getting creative with redevelopment?

Tomaselli: Developers will be looking to purchase older industrial, office and even retail buildings and demolishing some or most in order to deliver the state-of-the-art space demanded by tenants today. We expect to see older, class-B campus office and older antiquated retail becoming industrial-development targets going forward. In addition, the new peak pricing for industrial land will drive lease rates even higher than projected with the strong tenant demand for new space features, especially e-commerce-driven uses.

GlobeSt.com:  What else should our readers know about the industrial sector?

Tomaselli: Industrial is likely the healthiest sector in commercial real estate. We have not experienced over-building as in previous cycles due to the limited land in Southern California—including the Inland Empire, especially West IE—and the developers, investors, and financial partners are maintaining responsible investing standards and parameters for returns.