Tight Supply Sparks Industrial Gentrification

Proximity to the Port of Long Beach is one reason why demand is so high for industrial space in Los Angeles.

LOS ANGELES—The industrial rate in Los Angeles is falling to historic lows. It is all due to a confluence of factors: the ecommerce market has taken off; there is no land left for development; and Los Angeles has access to the two largest ports in the country. It all adds up to an incredibly active industrial market, but where is there to go in a market that is already maxed out? It was the question that we posed to  Chuck Littell, VP at Colliers International and an industrial expert, and he said that with no historic precedent, he doesn’t know.

“We don’t know where we go from here because it has never been this tight,” Littell tells GlobeSt.com. “I think it got down to 2.6% in 200, which is the height of the last cycle. So, we are now down to half of the vacancy rate from the last cycle.” The vacancy rate did hit near 1% in 2014, before new deliveries boosted it back up. Since, there has been limited space to develop new product and increasing demand as a result of growth in ecommerce.