The San Fernando Valley’s industrial market registered a razor-thin 1.4% vacancy rate this quarter while the average asking rent set a new record high. The average rent increased 3.7% from the prior quarter, up 9.8% year over year to $1.12/SF. Rent for industrial space in the San Fernando Valley has now surpassed the prior 2008 peak by 49.3%. The industrial market is feeling the strain under extremely low vacancy and limited new construction in the San Fernando Valley. Only one 15,500 square foot new building was added to the inventory this quarter – the first completed project since 2Q 2018. Only 45,000 square feet of new industrial space has been added to inventory over the past year, and nothing was under construction at the end of 2Q 2019.
Without land for development in the San Fernando Valley, the construction that is underway is taking place in the Santa Clarita Valley. More than one million square feet were under construction in the Santa Clarita Valley at the end of 2Q 2019. IAC Commerce Center, which is a 70-acre business park being built in phases, completed an approximately 216,000 square foot state-of-the-art warehouse/distribution facility this quarter. Two more buildings totaling more than 290,000 square feet are expected to break ground at IAC Commerce Center this year and three additional buildings totaling about 420,000 square feet are planned for Phase 3.
The San Fernando Valley industrial market will continue to see pricing increase under steady demand for limited product available for lease through the second half of 2019. Companies that do not need to be in the San Fernando Valley will migrate to the Santa Clarita Valley for lower prices and available space.
For more information on the industrial markets in Los Angeles County, Ventura County, Orange County or the Inland Empire, see our research page.