>> Vacancy Rises Due To Increased Move Outs

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1 Research & Forecast Report SOUTH BAY INDUSTRIAL Accelerating success. >> Vacancy Rises Due To Increased Move Outs Key Takeaways > Space givebacks this quarter totaled -716,700 square feet as the vacancy rate rose 30 basis points to end at 1.5%. > Industrial rents increased $0.01 over the quarter to $0.84 per square foot (P) triple net (NNN). Rents have increased 3.7% over the last 12 months and are at their highest recorded point. > Sales and leasing activity totaled 2,081,900 square feet, which breaks down into eight sales (248,700 square feet) and 47 leases (1,833,200 square feet). > Industrial space under construction totaled 1,585,800 square feet as several new speculative projects have started construction this quarter. Market Indicators Relative to prior period Forecast Vacancy Net Absorption Construction Rental Rate Summary Statistics South Bay, Vacancy Rate 1.5% Change from Q2 18 (Basis Points) Net Absorption Construction Completions +30 BPS -716,700 0 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 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, Average Asking Rent $0.84 P NNN Change from Q2 18 +$0.01 P NNN Labor Force South Bay, 12-mo Employment Growth (%) 12-mo Actual Employment Change Construction Manufacturing Transportation, Trade & Utilities 1.8% 0.4% -0.2% +2,600 1,300-1,600

2 SOUTH BAY INDUSTRIAL Vacancy Historical Vacancy v. Rents South Bay Q > The vacancy rate rose 30 basis points to 1.5%. Despite this rise in the vacancy rate, they remain near historic lows. > Vacancy was tightest in the LAX/El Segundo/Hawthorne submarket at 0.8% and remains highest in the Torrance submarket at 2.7%. > FORECAST: Future quarters are likely to see flat or slightly rising vacancy rates as high rents force tenants from marginal industrial spaces. Absorption and Leasing Activity $P PER MONTH (NNN) RENTS VACANCY 3% 2% 1% % VACANT (TOTAL) > Industrial demand reported negative 716,700 square feet of net absorption this quarter due to space givebacks across all markets and size ranges. > Sales and leasing activity totaled 2,081,900 square feet this quarter. This was broken down into eight sales (248,700 square feet) and 47 leases (1,833,200 square feet). > FORECAST: Absorption is likely to be flat or negative in future quarters as the trend of space givebacks continue. Positive absorption may occur when the buildings currently under construction are built and leased. Rental Rates > Average asking rents increased $0.01 to $0.84 P NNN. Asking rents reached their highest levels ever and are expected to rise in future quarters. > Demand remains high for newer modern industrial space. These new buildings come with higher asking rates, which will drive up asking rates for the region once they are constructed. > 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 their rents to increase roughly 45% upon renewal Net Absorption by Submarket South Bay Q (50,000) (100,000) (150,000) (200,000) (250,000) (300,000) (350,000) (330,500) CARSON/COMPTON/RD (202,600) (105,600) Historical Leasing Activity South Bay Q GARDENA/HARBOR FWY LAX/ES/HAWTHORNE (67,200) TORRANCE 0% (10,800) LB/HARBOR CITIES

3 SOUTH BAY INDUSTRIAL Construction > There were no new projects that finished construction this quarter. > Several new projects broke ground this quarter and construction activity totals 1,585,800 square feet of space currently under construction. > Development is exceedingly difficult in the South Bay, where raw land, if available, sells for a premium. > FORECAST: Tight market conditions have led to a building boom for industrial product in the South Bay. Future developments will likely require greater scrutiny on the part of developers as the remaining obsolete and under-utilized parcels often come with environmental risks inherent in infill development. Developers must factor this environmental cleanup cost along with steeply rising land sales prices when considering new projects in the South Bay. Investment Trends Historical Net Absorption & Construction Completions South Bay Q NET ABSORPTION Investment Trends Chart Los Angeles County Q Average Price Per sf CONSTRUCTION COMPLETIONS Average Cap Rate > This quarter, ProLogis completed its acquisition of DCT Industrial in an 8.4 billion dollar stock-for-stock transaction. Many of the desirable Class A properties were located in Southern California, driving average sales prices for the quarter to $216 per square foot. 7.0% 6.0% 5.0% 4.0% $250 $200 $150 > Rising sales prices led to further compression of cap rates to 5.0%. No other property type has seen such continued compression in cap rates, especially at a time when 10 year treasury rates have increased over the past year by 70 bps. > FORECAST: Investors remain attracted to the industrial sector due to continued shifts in consumer behavior and a growing economy. Southern California remains the premier industrial investment market due to low vacancy rates and continued rising rental rates. 3.0% $ % $50 1.0% 0.0% $0 Unemployment Rate Los Angeles County August 2018 Outlook > Rents are at their highest levels ever, prompting many users to consider buying their real estate. This proves difficult however, as few owners are willing to sell and the available inventory of buildings for sale 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 % 4.5% 4.4% 4.3% 4.2% 4.1% 4.0% 3.9% 3.8% 3.7% 3.6% 3.5% 4.5% 4.2% 3.9% United States California Los Angeles County

4 SOUTH BAY INDUSTRIAL 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 bigbox buildings (100,000 square feet) and the balance (55%) in small- and medium-sized buildings. Submarket Map RECENT TRANSACTIONS & MAJOR DEVELOPMENTS SALES ACTIVITY PROPERTY ADDRESS SIZE SALE PRICE PRICE P BUYER SELLER 2310 Imperial, El Segundo 93,800 $49.8 Million $530 P NantHealth Imperial Hornet Developers Mariner, Torrance 21,300 $7.6 Million $355 P MANO USA LLC Quan & Yeung Trust Western, Gardena 42,400 $6.2 Million $146 P Wedgewood Commercial Gardena Western Business Park 903 Walnut, Carson 21,200 $5.3 Million $248 P 3329 Jack Northrup Hartman Trust LEASING ACTIVITY PROPERTY ADDRESS LEASED LEASE TYPE BLDG TYPE LESSEE LESSOR 2988 Ana, Rancho Dominguez 85,000 Direct - New Distribution Tenant Triangle Group Bukewihge Family Trust Van Ness, Torrance 75,300 Direct - New Light Puma North America Inc. Heitman 1051 Artesia, Carson 60,000 Direct - New Light Lincoln Transportation MMBL Enterprises LLC 2111 Abalone, Torrance 50,700 Direct - New Manufacturing Filtration Group Grant & Popovich MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SUBMARKET STATUS ESTIMATED COMPLETION 1901 Pacific Coast Highway ProLogis 193,400 LB / Harbor Freeway Under Construction Q E Burnett, BLDG 3, Long Beach Pacific Industrial 105,000 LB / Harbor Freeway Under Construction Q Worsham, BLDG 16, Long Beach Sares - Regis 138,400 LB / Harbor Freeway Under Construction Q

5 SOUTH BAY INDUSTRIAL INDUSTRIAL OVERVIEW 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, % 0.0% 0.8% , ,400 61,300-10,000 $ ,000-39, ,812, % 1.3% 4.0% , , ,600 (28,700) (48,400) $ ,000-69, ,764, % 1.4% 5.4% ,400 - (71,800) $ ,000-99, ,958, % 0.0% 0.0% 95, ,300 95, $ , , ,431, % 0.0% 1.4% ,000 (76,900) (76,900) N/A 250, , ,664, % 0.0% 0.0% N/A 500, ,048, % 0.0% 0.0% N/A SUBTOTAL ,930, % 0.5% 1.9% 95, , , ,600 (105,600) (187,100) $1.20 GARDENA/HARBOR FWY 10,000-19, ,115, % 0.5% 2.8% , , ,000 (10,000) (3,300) $ ,000-39, ,156, % 1.1% 4.7% , , ,800 (50,300) (126,800) $ ,000-69, ,708, % 0.7% 3.0% 41, , , ,400 (57,800) (77,200) $ ,000-99, ,710, % 2.2% 9.4% ,100 - (80,000) $ , , ,068, % 3.6% 5.5% , ,200 38,200 (84,500) (122,500) N/A 250, , , % 0.0% 0.0% N/A 500, % 0.0% 0.0% N/A SUBTOTAL ,015, % 1.4% 4.5% 41, , , ,500 (202,600) (409,800) $0.85 TORRANCE 10,000-19, ,739, % 0.0% 1.6% 29, , ,400 75, $ ,000-39, ,854, % 2.3% 6.5% ,000 (32,900) (61,300) $ ,000-69, ,775, % 2.7% 1.3% , ,700 50,700 50,700 1,100 $ ,000-99, ,860, % 2.4% 5.4% ,200 (85,000) (154,400) $ , , ,420, % 0.4% 2.2% , , , $ , , ,883, % 8.0% 8.0% (130,800) $ , ,426, % 0.0% 8.3% , ,500 N/A SUBTOTAL ,959, % 2.5% 4.6% 29, , ,500 1,152,600 (67,200) 167,100 $0.88 CARSON/COMPTON/RD 10,000-19, ,585, % 0.0% 2.7% 10, , ,700 27, $ ,000-39, ,388, % 1.4% 3.9% 57, , , ,300 (20,500) (66,200) $ ,000-69, ,131, % 1.4% 6.0% , , ,500 (238,400) (238,400) $ ,000-99, ,042, , % 1.2% 3.4% , , ,900 (88,400) (113,300) $ , , ,033, % 1.0% 2.9% , ,000 2,247,400 16, ,600 $ , , ,504, , % 1.2% 3.6% (100,600) $ , ,047, % 0.0% 0.0% N/A SUBTOTAL ,733, , % 1.1% 3.6% 68, ,235, ,303,800 3,296,800 (330,500) (74,900) $0.79 LB/HARBOR CITIES 10,000-19, ,764, % 0.6% 1.8% 14, , , ,800 (29,300) (29,300) $ ,000-39, ,331, % 0.5% 1.7% , , ,400 32,200 39,600 $ ,000-69, ,731, , % 1.4% 3.6% ,700 (58,700) (79,900) $ ,000-99, ,287, , % 2.0% 3.5% , , ,100 45,000 57,100 $ , , ,466, , % 2.6% 4.6% N/A 250, , ,460, % 0.0% 0.0% N/A 500, ,905, % 0.0% 0.0% N/A SUBTOTAL ,947, ,070, % 1.0% 2.2% 14, , , ,000 (10,800) (12,500) $0.77 MARKET TOTAL 10,000-19, ,455, % 0.3% 2.0% 54, , , ,000 (39,300) (22,600) $ ,000-39, ,544, % 1.2% 4.0% 57, , ,300 1,040,100 (100,200) (263,100) $ ,000-69, ,110, , % 1.4% 4.4% 41, , , ,700 (304,200) (466,200) $ ,000-99, ,859, , % 1.4% 4.2% 95, , , ,600 (128,400) (290,600) $ , , ,419, , % 1.2% 3.1% , ,600 2,711,600 (144,600) 244,200 $ , , ,768, , % 2.5% 3.7% (231,400) $ , ,428, % 0.0% 1.4% , ,500 N/A TOTAL ,586, ,585, % 1.2% 3.4% 248, ,833, ,081,900 6,010,500 (716,700) (517,200) $0.84 5

6 SOUTH BAY INDUSTRIAL Definitions of key terms in this report Total Rentable Square Feet: Industrial space in buildings with 10,000 square feet 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 underconstruction 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 currently being marketed for occupancy, including space which may currently be 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, excluding lease renewals and 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 services and utilities. Reported on a monthly per-square-foot basis. 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. 413 offices in 69 countries on 6 continents United States: 145 Canada: 28 Latin America: 23 Asia Pacific: 79 EMEA: 131 > $2.7 billion in annual revenue > 2.0 billion square feet under management > Over 15,400 professionals 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. 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. UNITED STATES: South Bay Office License No Rosecrans Ave, Suite 3301 El Segundo, CA THOMAS GALVIN Research Analyst Research Services TEL: FAX: JENNIFER REESE Research Associate Research Services