Industrial Users Are Migrating North

Los Angeles industrial users are finding a new home north of the city. With a severe shortage of industrial product, industrial users are migrating to the San Fernando and Central Valley markets. According to research from JLL, the two markets have more attractive asking rents and access to labor, all within 60 miles or less of Los Angeles.

“Industrial rates have increased dramatically over the previous decade throughout Southern California and the supply of quality industrial product are at all-time lows,” Brent Weirick, managing director at JLL, tells GlobeSt.com. “With vacancy are factors hovering around 1%, industrial users are finding it increasingly difficult to locate quality product at reasonable pricing in greater Los Angeles. Industrial land values the L.A. basin now exceed $60 per square foot and only when you can find an available parcel. Given this dynamic, there are virtually no facilities available over 200,000 square feet within the North L.A. submarket, yet demand remains extremely high.”

Just like Los Angeles, the San Fernando Valley is also suffering from a supply shortage, pushing users further north into the Central Valley.  “There is a severe lack of available quality product within the San Fernando Valley. Due to lack of available state of the art facilities within North L.A., users are more often looking beyond these submarkets to provide for their needs,” says Weirick. “For example, Tejon Ranch Commerce Center (TRCC) is situated one hour to the north of the San Fernando Valley and 40 minutes north of Santa Clarita with lower rents and better access to labor for a modern, state of the art facility.”

Surprisingly, it isn’t manufacturing companies leading the trend. “Distribution companies  are leading the exodus as they look to lower their occupancy costs and shipping expenses, all while relocating into a class-A distribution facility,” says Weirick. “Within the San Fernando Valley, many users are forced to operate out of multiple facilities, which causes massive inefficiencies. Increasingly these users are looking to locate to the north at Tejon Ranch and the South Central Valley where than can occupy under one roof.”

Tejon Ranch also offers occupiers an expansion option that will accommodate and support future growth—an option not available in Los Angeles. “TRCC has 1,450 acres of fully entitled developable land, it offers expansion options that are not available in other projects or regions,” says Weirick. “Both Dollar General, who recently expanded their footprint by 40%, and Ikea have taken advantage of this opportunity at TRCC.”