Supported by the phenomenal growth of e-commerce, leasing activity was strong in the first quarter after the steep declines experienced earlier in early 2020. In Q1, across the Central Market, 139 leases were signed for a total of 2,836,295 SF; the average asking rate was $0.96 PSF. Q1 leasing volume for Central LA was 25% higher than Q1 2020 levels. Another 133 warehouse properties, totaling 2,000,000 SF, were sold in the period with an average price of $291.43 PSF. The average rate will move up or down slightly quarter-to-quarter depending on how many older, functionally obsolete warehouse and manufacturing buildings are in the pool of available inventory. The limited amount of available first-generation, Class A space leases at a premium to the average rate.
Below is a list of industrial real estate listings that were sold in the 4th Quarter of 2020 over 10,000 square feet in size in the Central Los Angeles industrial submarket. Information includes: buyer, seller, sale price, square footages, and property features for warehouses and manufacturing buildings.
Constructed in 1932, the original Sixth Street Viaduct (also known as the Sixth Street Bridge), was an important engineering landmark in the City of Los Angeles. It was one of a set of fourteen historic structures crossing the Los Angeles River, and the longest of these structures.
Due to its large size, the original Sixth Street Viaduct was constructed using an onsite concrete mixing plant. Unfortunately, the aggregate used in the concrete caused a chemical reaction known as Alkali Silica Reaction, which caused deterioration of the concrete structure within 20 years of its completion. The total project replacement cost is $488 million, making it the largest bridge project in the history of Los Angeles.
Located in a highly urbanized area just east of downtown Los Angeles, the original bridge acted as a critical transportation link between the neighborhoods of the Arts District on the west side and Boyle Heights on the east side.
The original viaduct was demolished in 2016. The new viaduct is scheduled for completion in 2022.
Amid exclamations like “I am going to be so happy to see the bridge completed!”, the most common questions on social media were about pedestrian and bike lanes and general accessibility. The wide and separate sidewalks and bicycle lanes planned for both sides of the bridge met with high praise. https://www.sixthstreetviaduct.org
Historically, the Arts District was home to industrial users who manufactured, distributed, and warehoused goods ranging from toys to frozen fish. Over time, the multi-story industrial buildings became antiquated and functionally obsolete – they began transitioning to lofts and studios for artists. About a decade ago, developers started converting the former warehouses into live/work lofts – starting with Barker Block Lofts, Toy Factory Lofts, and Biscuit Company Lofts. These projects helped spark a renewed interest in the Arts District, and the retailers have followed suit. Award-winning restaurants, designer apparel brands, and a multitude of breweries and cozy coffee shops make this neighborhood of mural-splashed warehouses truly unique.
The Arts District has also become a hotbed of residential and mixed-use development, with projects aimed at luring new residents to the live-work-play atmosphere of the area. The real estate players in area have shifted from private/local investors to developers with institutional funding, such as Shorenstein, Tishman Speyer, Hudson Pacific, etc. Office tenants are also vying to call this neighborhood home – Warner music Group, Adidas, Spotify and more will soon be settling into their world-class creative office spaces.
Although the landscape of the Arts District is changing dramatically, the intent of the developers and the local community is to keep the integrity, character, culture, and aesthetics intact for the most unique district of Downtown Los Angeles.
If you want to get a quick feel for the strength of the Central Los Angeles Industrial submarket, then glance at the below chart. It shows the 3 key metrics over the past decade.
The vital property statistic that I focus on the most is our low vacancy rate at just under 4%. The Southern California industrial real estate market has generally had the lowest vacancy rate in the United States over the past decade. Why? Because demand from tenants and buyers is very strong and we are an infill market given we have run out of vacant land to construct new buildings.
Here are the definitions of the other two metrics in the chart. For a complete list of commercial real estate terms defined please see our Glossary.
Net Absorption: The square feet leased in a specific geographic area over a fixed period-of-time after deducting space vacated in the same area during the same period.
Net Deliveries: The square feet of new construction delivered to the market minus any buildings that were demolished.