I am putting together the final numbers for the LA Basin Industrial Report. This report combines all the market information from all the individual industrial reports done by the local offices (the industrial reports that I cover are the West & East Inland Empire and the San Gabriel Valley).
One big indicator of concern is the net absorption which measures the occupied square footage of this quarter minus the occupied square footage of the previous quarter.
Net absorption is a proxy for demand. If it is positive, then there are more occupied SF this quarter than last quarter and vacancy rates are decreasing (demand is strong). If it is negative then there was more occupied SF last quarter and vacancy rates are rising (weaker demand).
For the first time in 5 years, the net absorption for the LA Basin (which now includes the East Inland Empire) is negative. This is due to recent developments in the Inland Empire; I tallied 2.75 million SF of negative net absorption.
Thus the LA Basin's greatest industrial asset has turned into a potential liability. Granted the fourth quarter was a rough quarter for all submarkets compared to the previous quarter, but not of the magnitude felt in the IE.
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