Are Industrial Land Prices Competing With Multifamily?

Industrial land prices are soaring as users scramble to find quality infill locations amid supply constrictions. Specifically, new product with 30-plus foot clear heights is in highest demand, and the only way to get more is to build it. As a result, industrial developers are paying double what a retail developer will pay, and are competing with office and some multifamily deals. Barbara Emmons Perrier, vice-chairman of capital markets at CBRE and an industrial expert, says that aside from multifamily with density, industrial land prices are the highest in L.A.

“Industrial pricing has gotten to such a high level that other than multifamily with density, it is probably the highest level,” Emmons Perrier tells GlobeSt.com. “Multifamily could still have higher values, depending on the site and the density; however, industrial values have really hit all-time highs. Right now, land is in very high demand.”

Of course, ecommerce is driving the high prices. Nearly all of the new development projects in Los Angeles are warehouse or distribution centers, not manufacturing. These facilities have specific building and geographical needs. “With the ecommerce trend, people are looking for class-A very efficient buildings for distribution,” Emmons Perrier adds. “A lot of our market is older and filled with functionally obsolete buildings. As land becomes available, it is in high demand because you can build a brand new building, get the highest rents and have the highest demand.”