Industrial Market
In the first quarter of 2000, the industrial base in Los Angeles County swelled 10 million square feet to just more than 860 million square feet, second nationally to Chicago in total industrial square footage.
Demand for industrial space remained strong through the first reporting period of the year, as evidenced by more than 10.3 million square feet of sale and lease activity. All submarkets experienced positive absorption, pushing the county’s total net absorption to more than 7.3 million square feet. Vernon, Los Angeles and South Bay lead the way, accounting for two-thirds of the county’s net absorption.
Over the past five years, the availability rate has dropped by 40%, from 9.4% in the first quarter of 1995 to 5.3% in the first quarter of 2000, reaching pre-1986 rates. Industrial vacancy in Los Angeles temporarily inflated 0.2 percentage points to 3.3%, driven by a 13% increase in new construction.
Average asking lease rates pushed higher, to 52 cents per square foot, an increase of 2 cents from the fourth quarter. New construction increased 1.2 million square feet from the fourth quarter, breaking the 10 million-square-foot threshold, and surpassing last year by a half-million square feet.
Office Market
During the first quarter of 2000, the Los Angeles County office market base grew 3 million square feet, a 2% increase. Several market indicators reached the highest levels recorded in 10 years, demonstrating the strength of the Los Angeles office market.
Net absorption of 2.2 million square feet during the first quarter of 2000 produced the greatest gain experienced in a single quarter since 1990. West Los Angeles, South Bay, and the Hollywood/Wilshire Corridor accounted for 70% of the total net absorption.
The vacancy rate declined to a 10-year low of 11.3%, four-tenths of a point below the fourth quarter mark. Hollywood/Wilshire and West Los Angeles experienced the most dramatic changes in vacancy over the past 12 months, declining more than 3 percentage points each. During the same period, the county-wide vacancy rate dropped from 13.1%. West Los Angeles and Glendale sustained single-digit vacancy rates of 5.0% and 7.2%, respectively.
The average asking lease rate rose 4 cents, reaching an all-time high for Los Angeles County of $1.82. During the past 12 months, four of the seven submarkets produced gains in the average asking lease rate exceeding 5%. Construction activity increased 7% over the fourth quarter to 3.2 million square feet, another 10-year high.
