Small-Box Industrial Users Face the Biggest Supply Challenges

The industrial market in Los Angeles is facing major supply challenges across product types—but users of small-box spaces may be facing the biggest hurdles. Owner/users specifically are finding few acquisition opportunities and are paying high prices to compete with investors for quality space—especially with rental rates expected to increase nearly 8% this year.

“Users seeking industrial buildings in this size range of approximately 25,000 to 45,000 square feet, in Los Angeles County and across Southern California, are facing a challenge. Due in part to skyrocketing land costs, most new industrial buildings coming to market are in the 100,000 square-foot-plus range,” Dennis Sandoval,” EVP at DAUM Commercial, tells GlobeSt.com. “This lack of available supply has led to many smaller industrial users leasing space in larger warehouses and distribution centers that allow multiple tenants to share space on a flexible basis. Those who desire ownership might even partner with another user to acquire a larger facility, which can be a strong solution. That said, this can understandably cause some operational challenges in the long run.”