With an industrial base of over 1 billion square feet , the Los Ange­les industrial market is one of the largest in the United States. It also has some of the highest asking rental rates, $0.95 per square foot, as well as one of the lowest vacancy rates (2.4%) in the nation. In recent quarters, net absorption has been soft, mainly due to lack of available inventory. Imports at the twin ports of Los Angeles and Long Beach, which handle roughly 40% of all imports into the coun­try, continue to be a major industrial driver for the region. In addi­tion, the region is the largest manufacturing center in the United States. For perspective, LA has more manufacturing jobs than the entire state of Illinois . Consequently, demand is still very strong. Although developers are attempting to keep pace with demand, they are not able to do so because of the scarcity of buildable land. Total warehouse square feet under construction fell from 5.4 MSF in 2018 to just 4.7 MSF in 2019. Investors love the potential for rent growth and low vacancy in tight markets and they have been aggressively securing deals with a willingness to accept lower returns for the stability and upside poten­tial of the Los Angeles market. Approximately $3.80 billion worth of industrial real estate traded hands in Los Angeles in 2019, setting a new high water mark for the region.

According to a recent Los Angeles Times article, Los Angeles County was the largest county by output, with its $710.9 billion GDP accounting for 3.8% of the U.S. total. L.A. County added $395.2 billion to total U.S. GDP from 2001 to 2018.

This is good news for industrial real estate values!