>> Net Absorption Dips In Q4 2017

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1 Research & Forecast Report South Bay INDUSTRIAL Q Accelerating success. >> Net Absorption Dips In Q Key Takeaways > Net absorption recorded negative 295,400 square feet this quarter; the first quarter of negative absorption in the past 30. > Industrial rents increased $0.01 per square foot (P) triple net (NNN) over the quarter to $0.82. Rents increased 9.3% over the last 12 months and are at their highest recorded point. > Sales and leasing activity totaled 1,515,700 square feet, which breaks down into seven sales (328,300 ) and 34 leases (1,187,400 ). > New space totaling 700,700 square feet is currently under construction and will complete in the next 12 months. > Vacancy increased 20 basis points but still remained near historic lows. Market Indicators Relative to prior period Q Forecast Vacancy Net Absorption Construction Rental Rate Summary Statistics South Bay, Q Vacancy Rate 1.2% Change from Q2 17 (Basis Points) 20 BPS Net Absorption -295,400 Construction Completions 32,000 The South Bay remains the premier market for distribution companies and cargo-centered sea-and-air industrial users. It is nearly fully developed, making land is incredibly scarce. Tight market conditions and a lack of larger modern space continue to be deterrents that drive tenants to neighboring markets; primarily to the east. Asking Rents South Bay, Q Average Asking Rent Change from Q4 16 $0.82 P NNN +$0.07 P NNN Y.O.Y. Change (%) +9.3% Labor Force South Bay, Q mo Employment Growth (%) 12-mo Actual Employment Change Construction Manufacturing Transportation, Trade & Utilities 6.2% -1.0% -0.2% +8,200-3,500-1,400

2 Vacancy Historical Vacancy v. Rents South Bay Q > The vacancy rate rose 20 basis points to 1.2% and remains near historic lows. > Vacancy was tightest in the LAX/El Segundo/Hawthorne submarket at 0.6% and highest in the Torrance market at 1.9% RENTS VACANCY 4% > Forecast: Future quarters are likely to see rising vacancy rates as new supply is brought to the market. Absorption and Leasing Activity $P PER MONTH (NNN) % 2% 1% % VACANT (TOTAL) > Industrial demand reported negative 295,400 square feet of net absorption this quarter ended at 595,400 square feet for > Sales and leasing activity totaled 1,515,700 square feet this quarter. This was broken down into seven sales (328,300 square feet) and 34 leases (1,515,700 square feet). > Forecast: Absorption is likely to be flat for 2018 as there is little new supply hitting the market and further gains will be hard to achieve Net Absorption by Submarket South Bay Q ,000 50,000 0% 43,700 Rental Rates 0 (50,000) (23,700) (100,000) (80,200) (59,800) > Average asking rents increased $0.01 P NNN over the quarter to end at $0.82. Asking rents reached their highest levels ever and will continue to rise. > Even marginal space in the South Bay is getting multiple offers and tenants are having to expand their search criteria in order to find suitable space. > Forecast: Rents will continue to rise in future quarters and tenants can expect to pay a premium for all types of industrial space. Tenants who signed leases five years ago can expect to their rents to increase roughly 45% upon renewal. (150,000) (200,000) (175,400) TORRANCE Historical Leasing Activity South Bay Q LB/HARBOR CITIES LAX/ES/HAWTHORNE GARDENA/HARBOR FWY CARSON/COMPTON/RD

3 Construction > New supply this quarter totaled 32,000 square feet in a single project. > Only 700,700 square feet of space remains under construction, an incredibly small amount for a millionsquare-foot industrial market. > Development is exceedingly difficult in the South Bay, where raw land, if available, sells for a premium. > Forecast: We are at the tail end of a construction boom, and new supply will trickle in for Development will continue to be limited for build-to-suit projects or creative rehabilitation of underperforming space. Historical Net Absorption & Construction Completions South Bay Q NET ABSORPTION CONSTRUCTION COMPLETIONS Investment Trends > Capitalization rates continued to tighten in Los Angeles County, averaging 4.6% in the final quarter of Investment Trends Chart Los Angeles County Q > Sales prices have fallen over the quarter to $147 P. The fourth quarter saw a reduction in the number of deals as pending sales have been pushed to the following year. > Forecast: The full impact of the GOP tax bill looks to place new deductions for pass-through entities and make value-add strategies even more appealing. This will benefit real estate investment vechicles and will likely lead to a flood of private capital into commercial real estate in the following years. 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Average Price Per sf Average Cap Rate $180 $160 $140 $120 $100 $80 $60 $40 Outlook 1.0% 0.0% $20 $0 > Tight market conditions are expected to persist in the South Bay industrial market for Rents are at their highest-ever levels, prompting many users to consider buying their properties. However, the available inventory is insufficient to meet demand. > Land is incredibly scarce and many industrial users are having to get creative or face paying a premium to secure land for truck, car or trailer storage. Unemployment Rate Los Angeles County November % 4.7% 4.7% 4.6% 4.5% 4.4% 4.4% 4.3% 4.2% 4.1% 4.1% 4.0% 3.9% 3.8% United States California Los Angeles County 3

4 Market Description The South Bay industrial market includes million square feet, representing 16 percent of the total space in the Los Angeles Basin for buildings 10,000 square feet and greater. The market has a high concentration of firms oriented toward international trade at the Ports of Los Angeles and Long Beach, as well as with LAX airport. The South Bay is a relatively mature market, with 63 percent of its space built prior to There is a good mix of product types, with nearly half of the space (45%) in big-box buildings (100,000 +) and the balance (55%) in small- and medium-sized buildings. Submarket Map RECENT TRANSACTIONS & MAJOR DEVELOPMENTS Q SALES ACTIVITY PROPERTY ADDRESS SIZE SALE PRICE PRICE P BUYER SELLER Avalon, Gardena 210,700 $46.4 Million $220 P Liberty Property TIAA CREFF 2100 Artesia, Long Beach 48,000 $6.6 Million $137 P JTMD, Inc. Eden Ventures LLC 646 Esther, Long Beach 38,700 $3.6 Million $94 P HPP Acquisitions, LLC Jose & Ursula Dumas 503 Weber, Compton 13,000 $2.6 Million $198 P Ivyn Ramos Trust Thorock Metals, Inc. LEASING ACTIVITY PROPERTY ADDRESS LEASED LEASE TYPE BLDG TYPE LESSEE LESSOR 1431 Via Plata, Long Beach 98,000 Direct - New Light Classic Brands, LLC 1431 Via Plata, LLC 1011 Francisco, Los Angeles 45,600 Expansion Light Hawaii LED Star, LLC PGIM Real Estate S Figueroa, Los Angeles 41,200 Direct - New Light Accurate Staging, Inc. Frome Family Trust 2640 Del Amo, Compton 38,000 Sublease Distribution Neutron Holdings, Inc. Complete Gym Colutions MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SUBMARKET STATUS ESTIMATED COMPLETION Normandie, Torrance Bridge Development 512,500 Torrance Under Construction Q Alondra, Gardena Alere 147,100 Carson / Compton / RD Under Construction Q

5 INDUSTRIAL OVERVIEW Q EXISTING PROPERTIES CONSTRUCTION VACANCY AVAILABILITY ACTIVITY ABSORPTION RENTS Submarket/ Building Size Bldgs Total Inventory Completions Current Qtr Under Construction Vacancy Vacancy Prior Qtr Availability Sales Activity Number of Sales Lease Activity Number of Leases Total Gross Activity Current Qtr Total Gross Activity YTD Net Absorption Current Qtr Net Absorption YTD Weighted Avg Asking Lease Rates LAX/ES/HAWTHORNE 10,000-19, ,250, % 0.2% 0.6% , , ,000 12,800 39,800 $ ,000-39, ,786, % 1.8% 4.2% , , ,000-22,200-76,000 $ ,000-69, ,824, % 0.0% 4.6% ,100-50,400-30,300 $ ,000-99, ,032, % 0.0% 0.0% 80, , , $ , , ,431, % 0.0% 0.0% , ,000 N/A 250, , ,664, % 0.0% 0.0% , ,200 N/A 500, ,048, % 0.0% 0.0% N/A Subtotal ,037, % 0.4% 1.6% 80, , , ,200-59, ,700 $1.20 GARDENA/HARBOR FWY 10,000-19, ,115, % 0.3% 2.6% , , ,400-25,600-2,700 $ ,000-39, ,126, % 0.9% 3.4% 59, , , ,200 46,000 40,500 $ ,000-69, ,708, % 0.6% 1.6% 41, , , ,300-44,100-2,000 $ ,000-99, ,669, , % 0.0% 2.6% , N/A 100, , ,921, , % 2.6% 2.6% , ,900 $ , , , % 0.0% 0.0% N/A 500, % 0.0% 0.0% N/A Subtotal 1,055 31,796, , % 0.8% 2.6% 100, , ,400 1,398,800-23,700 6,900 $0.71 TORRANCE 10,000-19, ,739, % 0.4% 1.8% , ,200 11,200 11,200 0 $ ,000-39, ,854, % 4.2% 6.3% , , , ,400 $ ,000-69, ,775, % 3.6% 1.3% , , ,100 86,400-26,000 $ ,000-99, ,860, % 0.0% 4.7% , ,500 $ , , ,420, % 0.0% 3.8% ,800-14,600 23,800 $ , , ,883, % 0.0% 8.0% , , ,400 $ , ,914, , % 0.0% 0.0% N/A Subtotal ,447, , % 1.3% 4.3% , , , , ,700 $0.83 CARSON/COMPTON/RD 10,000-19, ,585, % 0.3% 0.5% , , ,400 10,600 13,400 $ ,000-39, ,389, % 0.3% 2.3% 26, , , ,400 15,300 47,300 $ ,000-69, ,080, % 0.5% 2.2% , , , ,000-67,700 $ ,000-99, ,042, % 1.7% 1.9% 73, , , ,300 83,900 49,400 $ , , ,033, % 2.0% 5.4% , ,600 1,966,100-73,300-30,800 $ , , ,504, % 0.0% 1.6% ,100-22, ,300 $ , ,047, % 1.4% 0.0% , , , ,200 0 $0.69 Subtotal 1,235 83,682, % 1.4% 3.3% 99, , ,900 4,793,300 43, ,900 $0.74 LB/HARBOR CITIES 10,000-19, ,764, % 0.6% 1.7% , , , ,600 $ ,000-39, ,294,600 32, % 0.5% 3.4% , , ,600 24,600 13,700 $ ,000-69, ,731, % 0.3% 2.6% 48, ,000 68,000-43,800-80,800 $ ,000-99, ,287, % 0.5% 2.5% ,500-45,000-57,200 $ , , ,466, % 3.4% 3.7% ,200-16, ,200 $ , , ,460, % 0.0% 0.0% N/A 500, ,905, % 0.0% 0.0% N/A Subtotal 1,051 34,910,600 32, % 0.9% 2.3% 48, , ,100 1,030,100-80, ,500 $0.83 MARKET TOTAL 10,000-19,999 1,915 26,455, % 0.4% 1.6% , , ,800 9,000 67,100 $ ,000-39,999 1,408 38,450,800 32, % 1.3% 3.7% 85, , ,200 1,571,200 63,700 28,900 $ ,000-69, ,120, % 0.7% 2.4% 89, , ,900 1,240, , ,800 $ ,000-99, ,891, , % 0.9% 2.1% 153, , , ,600 38,900 23,700 $ , , ,272, , % 1.8% 4.3% , ,600 3,289, , ,300 $ , , ,768, % 0.0% 2.7% ,171, , ,100 $ , ,915, , % 1.0% 0.0% , , , ,200 0 $0.69 Total 4, ,875,400 32, , % 1.0% 2.9% 328, ,187, ,515,700 8,994, , ,300 $0.82 5

6 Definitions of key terms in this report Total Rentable Square Feet: Industrial space in buildings with 10,000 or more of industrial space. Includes speculative as well as owner-occupied buildings. Excludes Research & Development (R&D) buildings (industrial buildings with at least 30% office build-out, 3/1000 parking ratio and a high level of finish). Excludes space that is under-construction or renovation. Vacancy: Space in existing buildings that is vacant and immediately available during the quarter for direct lease, for sublease or for sale, plus space that is vacant but not available for direct lease or sublease. Availability: All space that is being currently marketed for occupancy, includes space which may be currently occupied or which may be under construction or renovation. Net Absorption: Net change in occupied square feet from one period to the next (includes the impact of change in vacant space available for sublease). Gross Activity: Square feet sold and leased for all known transactions completed during the quarter. Excludes lease renewals. Excludes investment sale transactions. Weighted Average Asking Rental Rates: Weighted by square feet available for direct lease. Data is based on triple net rents, and excludes expenses such as taxes, insurance, maintenance, janitorial service and utilities. Reported on a monthly, per basis. Construction Completions: Total square feet added during the quarter via construction completions, including renovated space returned to market, less total square feet taken off-market due to demolitions or conversions. Technical Note Colliers International is continuously refining its database. The data shown in the historical tables and graphics in this report have been adjusted to take into account these changes in the database. This report has been prepared by Colliers International for general information only. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This report and other research materials may be found on our website at www. colliers.com/greaterlosangeles. 396 offices in 68 countries on 6 continents United States: 153 Canada: 29 Latin America: 24 Asia Pacific: 79 EMEA: 111 UNITED STATES: South Bay Office License No Rosecrans Ave, Suite 3301 El Segundo, CA > $2.6 billion in annual revenue > 2.0 billion square feet under management > Over 15,000 professionals TEL: FAX: Under Construction: Includes buildings that are in some phase of construction, beginning with foundation work and ending with the issuance of a Certificate of Occupancy. HANS MUMPER Executive Managing Director Greater Los Angeles THOMAS GALVIN Research Analyst Research Services 6