Logistics Companies Are Behind the Industrial Boom

LOS ANGELES—Logistics companies are absorbing a significant portion of the industrial space in the Los Angeles market. According to research from JLL, logistics and distribution users accounted for nearly 40% of the top industrial leases in the first half of 2016, and of the top 25 leases, nine deals were with logistics users, accounting for 2.3 million square feet. Same-day or next-day delivery services seemed to be driving the tend, and most of the leases signed (five out of nine) were port-centric. To dig a little deeper into this leasing trend, we sat down with Joe Dimola, VP at JLL, for an exclusive interview. Here is what he tells us about logistics users in the market.

GlobeSt.com: How does the volume of logistics leasing this year compare to last year? Is it surprising to see that logistics users absorbed 2.3 million square feet?

Joe Dimola: The volume of deals is not surprising due to the growing presence of e-commerce fulfillment. As e-commerce continues to grow, there will be more logistics and distribution user growth. Of the top 25 industrial deals in L.A. for 2015 year to date, six were logistics and distribution users. Of the top 25 industrial deals in L.A. for 2016 year to date, nine were logistics and distribution users.

GlobeSt.com: The chart says that the market is also seeing more same-day users. Is this segment of users looking for a different type of space than other distribution users?

Dimola: Same-day users are focused on where the facility is located. They look for space along easily accessible freeways, in close proximity to densely populated areas and nearby other logistics hubs. Most importantly, they need to be close to where the consumers live. Same-day users also demand the highest-end buildings because they are highly focused on their operational efficiency. However, due to the lack of available Class A product in the infill, they need to make due with the next best option.

GlobeSt.com: With the dearth of supply in the port-centric markets, how long is it taking for these users to find spaces to meet their needs? What are other industrial users doing to find space?

Dimola: It's taking logistics and distribution users a minimum of a few months to find spaces to meet their needs. This is primarily due to the lack of available space within the LA Basin. Not only are options limited, but users also competing with other tenants for the space that meet their needs. In some cases, we are seeing multiple offers on buildings within a short period of time.  Other users need to make due with the next best option, which can be well-located class-B properties.

LOS ANGELES—Logistics companies are absorbing a significant portion of the industrial space in the Los Angeles market. According to research from JLL, logistics and distribution users accounted for nearly 40% of the top industrial leases in the first half of 2016, and of the top 25 leases, nine deals were with logistics users, accounting for 2.3 million square feet. Same-day or next-day delivery services seemed to be driving the tend, and most of the leases signed (five out of nine) were port-centric. To dig a little deeper into this leasing trend, we sat down with Joe Dimola, VP at JLL, for an exclusive interview. Here is what he tells us about logistics users in the market.

GlobeSt.com: How does the volume of logistics leasing this year compare to last year? Is it surprising to see that logistics users absorbed 2.3 million square feet?

Joe Dimola: The volume of deals is not surprising due to the growing presence of e-commerce fulfillment. As e-commerce continues to grow, there will be more logistics and distribution user growth. Of the top 25 industrial deals in L.A. for 2015 year to date, six were logistics and distribution users. Of the top 25 industrial deals in L.A. for 2016 year to date, nine were logistics and distribution users.

GlobeSt.com: The chart says that the market is also seeing more same-day users. Is this segment of users looking for a different type of space than other distribution users?

Dimola: Same-day users are focused on where the facility is located. They look for space along easily accessible freeways, in close proximity to densely populated areas and nearby other logistics hubs. Most importantly, they need to be close to where the consumers live. Same-day users also demand the highest-end buildings because they are highly focused on their operational efficiency. However, due to the lack of available Class A product in the infill, they need to make due with the next best option.

GlobeSt.com: With the dearth of supply in the port-centric markets, how long is it taking for these users to find spaces to meet their needs? What are other industrial users doing to find space?

Dimola: It's taking logistics and distribution users a minimum of a few months to find spaces to meet their needs. This is primarily due to the lack of available space within the LA Basin. Not only are options limited, but users also competing with other tenants for the space that meet their needs. In some cases, we are seeing multiple offers on buildings within a short period of time.  Other users need to make due with the next best option, which can be well-located class-B properties.