Notes from our Industrial Building Research
Industrial Building Rents
Rents are declining from pandemic highs. The rent range for greater Los Angeles (including property taxes)
is $1.00 per foot for older spaces to over $2.50 per foot for newer bulk space. More space is available in
almost all size categories. Smaller spaces are rare due to the higher cost to build. One note for the South Bay.
Rents are lower in The Gardena/County Strip area because of RV encampments, concerns of employee safety,
and local government failure. Rents are highest in the LAX, Beach Cities, and LAX where there is high-tech
manufacturing, defense and airfreight.
Property Taxes have a big impact on rents. At one time, property taxes were only a few cents per square foot (psf)
but with a rise in property values, it’s common to see up to $.50 psf once properties are reassessed. It can be 25%
or 30% of your total rent. Due to Proposition 13, when a property is sold, taxes are re-assessed at the new value
and that increase is normally passed through to tenants. Looking at the chart below, lowest taxpayers are almost
always longtime property owners, families or partners. High taxes are more common because of the long investment
boom since 2010.
Tenants seeking heavy power, 2000 AMPs or greater, will face delays of twelve (12) months or greater because
electrical switchgear and transformers are on back order. Many tenants are seeking EV chargers which increases
load. In some parts of town, vandals strip vacant buildings of electrical breakers and copper wiring making the
buildings inoperable. The graph below shows there is an ample supply of buildings with sufficient power.
Many buildings with the most power will lack the most modern features since they date back from L.A.’s
manufacturing past. Developers are installing large panels in their new buildings.
Industrial Sale Market
The 20-year Treasury is at 4.9% and mortgage loans are over 8%. These relatively high rates have put considerable
restraint on an investor led boom throughout industrial Los Angeles. With many investors sidelined, owner/users
have the opportunity they were waiting for to buy. Even at current mortgage rates, the loan payment approximates
the amount you would pay for rent. Loans are prioritized for long term credit tenants and not risky investment deals.
You will find the large acquisition funds willing to sell off their less desirable assets.
Jim Klein, SIOR a 40-year background of industrial real estate brokerage and investment in the Los Angeles area.
Our specialty is representing corporations and local landlords. While we practice in Los Angeles, we have moved
many customers out of state with help from our SIOR colleagues throughout North America. Klein Commercial recently
added new sales staff, IT and analytics to our brokerage service. Please consider us for your next industrial
real estate deal.
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