Los Angeles County has the largest industrial market in the country and the tightest vacancy rate at 1.6 percent as of third-quarter 2007, according to the 2007 Southern California Office & Industrial Market Report released in December by the University of Southern California's Lusk Center for Real Estate Casden Real Estate Economics Forecast. The average vacancy rate in Los Angeles County has remained below 5 percent since third-quarter 1999, when the supply of industrial space began to rapidly disappear, the report stated. Supply constraint, rent growth potential, despite having the highest rental rates in the country at 41 cents per square foot triple net, and pent-up demand from a 1.2 percent vacancy rate make Los Angeles County industrial an attractive investment. Birtcher Development & Investments and Cornerstone Real Estate Advisers signed a $207 million lease for 30 years with Kroger Co., setting a national record for an industrial lease transaction, according to the Casden Forecast. The Birtcher Distribution Center is scheduled for completion in third-quarter 2008 and will be a state-of-the-art $50 million industrial distribution center encompassing 552,000 square feet, according to the Casden Forecast. While prices are high when properties do trade, transactional volume on both the leasing side and sales side is low as a result of this low vacancy, according to the Colliers report. Activity totaled just 2.2 million square feet in third-quarter 2007, down from 3.3 million square feet the previous quarter, the report stated.
January 14, 2008