A new Cushman & Wakefield report provided data to support a positive economic outlook in the industrial sector.
While L.A. County is still down 557,200 jobs since February of last year, on a positive note, the Consumer Confidence Index surged in March to its highest reading in a year. At the end of first quarter 2021, the economic recovery appeared to gain steam and recent economic data paint a rosier picture after months of pandemic-induced crisis.
The healthiest of all commercial real estate quadrants seemed to be the sturdy, reliable industrial sector.
“The industrial market in the East San Fernando Valley as a whole, definitely is strong,” said Cushman & Wakefield broker Paul Sims. “You saw last year a bulk of e-commerce space. This year, you’re starting to see some of the studio users heavy pop in the East San Fernando Valley (rebounding).”
“Once those users become fully active upon June 15 reopening, I think you’re going to see a huge expansion,” Sims added.
He noted that the slowdown in entertainment tenants has hurt the Valley market for the past three quarters.
“We’re still about 2 percent vacant market in the Valley and outside of Avion (in Burbank), not a lot of new construction. There are some landsites that traded last year that will serve in the future,” he explained.
“That’s the same for all of greater L.A.,” noted Sims’ colleague, industrial research director for the Los Angeles Basin Tina Arambulo. “That’s the reason why Santa Clarita, they have more land there.”
Arambulo pointed to North L.A.’s net absorption of 700,000 square feet last year and how, at the halfway mark, this year has already exceeded that figure.
“In the first quarter alone, we already surpassed that,” she said. “North L.A. is getting strong.”
And Santa Clarita’s greatest feature? Proximity.
“With Santa Clarita, you’re 5 to 10 minutes from the northern part of the East San Fernando Valley,” she said.
Sims and Arambulo agree that there is still more runway for industrial in Santa Clarita and Ventura County.
“There’s room in Simi, depending on their use, their employee basis, where they’re sending out to,” Sims said. “With rising lease rates in the East San Fernando Valley, there’s definitely more runway in Santa Clarita. I think you’ll see lease rates increase in Santa Clarita, especially with new product.”
Ultimately, both professionals are optimistic as the market deepens into 2021.
“As California continues to open up, there’s going to be a continued need for logistics and e-commerce as studio users recovers from last year,” Sims said. “Even entertainment services for a concert or festival, once those events happen again and we see the demand return, they’ll need space as they will have to accommodate the square footage.”