The Lowest Vacancy of Any Major Market
General Overview
At midyear, the Greater Los Angeles industrial market has the lowest vacancy of any major market in the
U.S. With an astonishing vacancy rate of 1.2%, and having absorbed over 2 million square of feet of space,
rents have only continued to rise. Yet, even with asking rents rising, class A and B product are not staying
long on the market. They are leasing quickly. And, although industrial land remains extremely sparse, strong
demand for Class A product has translated into a palpable uptick in development activity across the basin.
In fact, in addition to 1.6 million square feet of new deliveries, 8.5 MSF is under construction—surpassing
the previous record set at the end of 2000 (8.0 MSF).
Central Los Angeles
Central Los Angeles’s market fundamentals remained healthy at mid-year with a drop in 25 basis points in
overall vacancy. In the past eight quarters, vacancy has dropped more than a 100 basis points. Consequent-
ly, rental rates have faced signifi cant upward pres-
sure. Since Q2 of 2015, rates have risen over 20%.
Although demand for industrial product has never
been greater, there is not enough supply to meet
tenant demand. Thus, after a 12.3% annual increase
in leasing volume in 2016, leasing volume slowed at
mid-year in 2017—3.5 MSF compared to 5.7 during
DOW JONES IND. AVERAGE
the fi rst half of 2016.
Economic Indicators
Mid-Counties
Due to negative net absorption, particularly in the
Buena Park and Santa Fe Springs submarkets, the
overall vacancy rate rose slightly to 1.1%. Nonethe-
less, demand from logistics and distribution users
fueled strong warehouse rent growth. In terms
of lease rates, sale values, and land prices, the
Mid-Cities industrial market is performing at the
highest levels. To placate users who need modern
logistic facilities to accommodate last mile distribu-
tion centers, over 2.0 MSF of space is under devel-
opment, with over 30% of it pre-leased.
2012 13,105
2013 16,576
2014 17,832
2015 17,425
2016 19,762
2017 21,349
CRUDE OIL PRICES (USD/ BBL)
2012 101.17
2013 98.87
2014 60.55
2015 46.92
2016 52.80
2017 47.20
2012 3.04
San Gabriel Valley
U.S. 10 YEAR TREASURY RATES
With 305,000 of net absorption in the second
quarter, the dynamism of the SGV market continues
uninterrupted. It is now in its eight year of posi-
tive growth. Vacancy is now below 1.0%. The tight
market is inhibiting companies from expanding and
is thus limiting leasing activity. Compared to this
time last year, leasing activity is down 14%. Howev-
er, the demand for Class A product is very high, 2.5
million square feet remained under construction at
the end of Q2 2017. Although this is but a fraction of
the total inventory, it will add much needed supply
to this highly constrained market. Northwestern (or
Eastern?) SGV has the most development activity
with 1.1 MSF.
2013 2.12
2014 1.98
2015 2.28
2016 2.28
2017 2.33
U.S. UNEMPLOYMENT RATE
2012 7.80
2013 6.70
2014 5.60
2015 5.00
2016 4.90
2017 4.30