The San Fernando Valley and Ventura County industrial market’s fourth quarter and full 2010 results show increased sales and leasing activity and lower availability rates mixed with higher vacancy rates, according to Colliers International’s fourth quarter report. The region’s vacancy rate increased by 10 basis points to 5.2 percent. The increase was a result from an additional -52,800 square feet of net absorption. The vacancy rate is forecast to eventually flatten out and decline in 2011 as long as the economy continues to improve. Vacancy rates remain highest in the Santa Clarita Valley submarket at 7.5 percent and lowest in the central San Fernando Valley submarket at 2.1 percent. The rates are also highest in buildings of 40,000 to 69,999 square feet at 6.1 percent and lowest in the big-box segment over 100,000 square feet at 4.3 percent. The San Fernando Valley and Ventura County industrial market’s vacancy rates remain the lowest in the entire Greater Los Angeles Basin, according to the report. Availability rate The availability rate, which dropped to 9.4 percent in the fourth quarter, suggests the amount of industrial space givebacks has slowed compared to 2009. It also indicates that an increasing amount of space on the market has been restricted for future move-ins. Last quarter marked the second consecutive quarter that the rate declined. The 2010 fourth quarter also marked the first time in two years that rents did not decline market-wide. The weighted average asking rental price for direct space stayed flat at $0.54 per square foot, per month Triple Net. Average sales prices per square foot did, however, drop to $109. The report also noted that industrial landlords remain aggressive in their tenant retention tactics, which has led more industrial users to negotiate favorable leases or purchase their own buildings. Sales and leasing activity The region experienced a 44-percent increase in sales and leasing activity for the entire year of 2010 compared to the previous year. Colliers International counts the higher leasing and sales activity combined with lower industrial availability as a sign that the region’s market might be bottoming. The activity in 2010 included 5.1 million square feet, compared to 3.6 million square feet in 2009. Net absorption for the entire year also improved, moving to -1.5 million square feet from -2 million square feet in 2009. Sales and leasing activity are expected to remain at an elevated level going into 2011. Sales highlights included Canyon Plastics acquiring a 110,000-square-foot building in Valencia for $9 million and Build Rehabilitation Industries acquiring a 48,500-square-foot building in Sylmar for $5.2 million. Acquisition activity in the industrial market is still seen as being dominated by owner-user sales.
