Los Angeles Warehouse Vacancies Climb to Highest in a Decade

Roofs of commercial buildings and warehouses in Southern Los Angeles.

(Bloomberg) — Vacancies for industrial buildings in the greater Los Angeles area, the largest market for that property type in the US, have risen to the highest level in a decade.

“The industrial landscape has drastically changed in the last 24 months as vacancy and availability have reached 10-year highs,” according to a report Monday by real estate brokerage Colliers.

Warehouses were favored by commercial real estate investors as online shopping boomed in the pandemic, helping to push industrial vacancies to historic lows in the early months of 2022. But a flood of new construction, cooling international trade and higher borrowing costs have weighed on the market.

The vacancy rate for industrial buildings in the greater Los Angeles area swelled to 4.1% in the first quarter, up from 1.5% in the first quarter of 2023, Colliers reported. Asking rents have also eased over the past year.

The Inland Empire submarket — located east of Los Angeles and considered a key hub for big box and e-commerce logistics — saw its vacancy rate hit 6.2%, the highest since 2013, Colliers said.

Voit Real Estate Services, which also tracks the industrial market, said the market dynamic in the Inland Empire is starting to favor buyers and tenants.

“The Inland Empire market will remain under immense pressure in the coming quarters,” Voit Real Estate Services said in a separate report. “It is the only Southern California market with significant ongoing construction activity, and this fundamentally puts upward pressure on vacancy and downward pressure on average asking lease rates and sales prices.”

Most Read from Bloomberg

©2024 Bloomberg L.P.