Main events in Los Angeles County’s submarkets.
The South Bay industrial market remained tight in the third quarter as improved port activity continued to lift the market. The office market, though improved slightly, still had the highest vacancy rate in the region.
At 6.4 percent, quarterly industrial vacancies were 1 point higher than the prior period, but a point lower than the same quarter last year, according to data from Jones Lang LaSalle Inc.
About 3.3 million square feet of sales and leasing transactions were closed in the quarter, a little less than the 3.5 million square feet the previous quarter. Quarter-over-quarter average asking rents held steady at 58 cents, though they were 3 cents higher than the year-earlier period.
Luke Staubitz, executive vice president at Jones Lang LaSalle, said despite a seasonal pause in August, the third quarter was a continuation of what happened in the second – demand strengthened as consumer confidence, housing industries and automobile sales all improved.
“We have a situation where we have an extraordinarily low vacancy factor, very little inventory,” he said.
Staubitz said he expected that the South Bay vacancy rate would continue to trend down through the end of the year.
On the office front, the third quarter vacancy rate dropped slightly to 21.1 percent from 21.3 percent the previous quarter, with the average asking rent coming in at $2.30, slightly higher than $2.28 the previous period.
Steve Solomon, managing director at Jones Lang LaSalle, said activity in the office market during the quarter was fairly flat, with the exception of Torrance, which suffered more vacancies.
“Torrance has still felt the pain from the car companies vacating,” he said.
The market doing the best in South Bay was still El Segundo, where the average asking rent was $2.46, as many tenants in West Los Angeles and Santa Monica migrated south in search of lower rents and closer proximity to residential communities such as Hermosa Beach and Manhattan Beach, Solomon said.
“The biggest drag on this market is the LAX-Century Boulevard market,” he said. “It’s only a 3.5 million-square-foot market, but 40 percent vacancy really hurts the South Bay.”
– Kay Chinn
