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Why Is L.A.’s Industrial Vacancy Rate Rising?

The industrial market has unarguably been the hottest market in Southern California—yet surprisingly, the vacancy rate in Los Angeles ticked up in the fourth quarter of 2018. According to a recent report from Avison Young, the vacancy rate increased nearly a full percentage point to 3% at the end of 2018, up from 2.1% in 2017. For 2019, the report forecasts that the vacancy rate will remain at 3% in 2019. While 3% is still a very tight market—and no reason for users hunting for space to celebrate—could this mean the beginning of a slow down in the industrial market?

Chris Cooper, principal and managing director at Avison Young, says no. “I think it is a blip. I would attribute it to additional construction, and it is really a matter of a property being preleased before delivery,” he tells The industrial pipeline in Los Angeles has been growing and currently there is more than 4 million square feet of space under construction in Los Angeles, according to the report. The construction activity is definitely contributing to the increase in vacancy.

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