What’s Driving the Waiting List for LA Industrial Real Estate?

Looking to lease industrial real estate in Los Angeles? Despite looming uncertainty about the economy and talks of a slowdown – welcome to the extensive waiting list of other businesses seeking similar solutions for their space needs.

The LA industrial vacancy rate is well below the national average of 4.9%, sitting near 2.0% or lower in many submarkets. The limited inventory of highly functional, available space that does actually see the market also ends up evaporating rapidly.

An extraordinary level of demand continues to exceed supply—this is true for available land or well-located logistics space for lease. While every submarket has its own story, record-breaking absorption, rent growth, and inadequate options are all leading today’s conversations.

Without any substantial change to market fundamentals on the horizon, decision makers will be faced with various challenges looking ahead. Provided are four recommendations to consider before pursuing a new lease in today’s fast-paced marketplace.

  1. Lean on existing relationships

Today, who you know can have more of a positive impact than most realize. Being acquainted with the right players in the commercial real estate industry and larger business community can help raise awareness to off-market opportunities and advanced lead time to act.

In Los Angeles, most warehouse and manufacturing spaces are spoken for. Taking advantage of existing relationships wherever you can is critical to your success. If you don’t have the right contacts in place, make sure your real estate broker does. Don’t be afraid to ask them the hard questions, verifying their experience, references and recent transaction history. Respected designations like SIOR signify they have gone through advanced education and other rigorous requirements to become a part of the organization and are worth looking for when selecting a trusted broker.

  1. Examine efficiencies

Creative solutions are often readily available when identifying efficiencies becomes a focused pursuit. Consider engaging a consultant, racking company, or architect that can analyze your business and its current operations.

Time and time again, we find that an outside set of professional eyes can deliver a unique perspective. Be open-minded to changing processes, systems and innovation. It may be that your business can do more with less and not have to relocate at all – or at least for the foreseeable future until more viable choices become available.

  1. Consider alternative locations

The massive amount of redevelopment across LA in recent years has resulted in millions of rezoned square footage that is no longer considered industrial. However, there are still alternative markets available if relocation is a possibility – each offering a variety of product and pricing.

If you can maintain flexibility and expand your search beyond the core LA market, consider exploring all reasonable options. It is not uncommon for brokers to run a comparative analysis across various regions – ranging from LA, Inland Empire even to Phoenix – and targeted areas within each. Having alternatives will reduce the pressure to make a rushed decision and in the process, help avoid costly mistakes.

  1. Start early

Start early—extremely early. With LA breaking records for fast-moving industrial space, settling for a short-term stay is not necessarily the smartest move. Businesses must start discussions about renewal vs. relocation as much as a year in advance of their lease expiration. Don’t assume that your landlord will be patiently waiting for you or that others aren’t aware that your lease is coming to term.

Looking ahead

As we look ahead, while many debate a softening in the market, we can expect strong demand to continue for the foreseeable future. Perhaps a period of adjustment and subsequent stabilization, but there is little indication that our market is officially running out of steam.

With this in mind, don’t get caught by starting too late. Remember that finding your next successful lease will require a proactive approach, proper planning, and assembling the right team of professionals to assist you.


Learn more about membership with SIOR at go.sior.com/results. This article originally appeared on L.A. Biz online.

About the Author:

Robert Thornburgh, SIOR, CCIM, CPM
Industrial Specialist
Regional President, Brokerage, Kidder Mathews
El Segundo, CA
View the complete SIOR profile| robertt@kiddermathews.com

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