For industrial spaces 25,000 square feet and greater, there are 150 available locations. Of these 40 are subleases with an average term of 36 months. Rents are declining and property taxes are a substantial differentiator when comparing “total” rent.
More buildings are being offered for sale because of slack tenant demand. Many of these buildings would have been swept up by Private Equity but high interest rates and stricter debt standards have put them on the sideline. More property owners are “testing” the sale market and we expect price reductions to continue.
The best value for most tenants, 100,000 square feet and greater, is second and third generation spaces. Buildings built since the year 2000 are highly functional with the same characteristics as brand-new buildings except for ceiling heights, although many of these 2nd Gen buildings still go to 30’. The market is tighter in the smaller sizes because very little product has been developed at less than 50,000 square feet.
When tenants want to expand their search, we often move South Bay tenants to Santa Fe Springs/Mid Counties or to Inland Empire West. Popular destinations when tenants decide to “Pick up and Go” include Phoenix, Texas, and the Carolinas.
