industrial SAN FERNANDO VALLEY & VENTURA COUNTY market report Rents Continue To Rise As Vacancy Rate Continues To Decrease Market overview MARKET indicators - VACANCY 2.9% AVAILABILITY 5.2% NET ABSORPTION +835,8 CONSTRUCTION 43,9 RENTAL RATE $.6 P NNN UNEMPLOYMENT 7.8% In, the San Fernando Valley & Ventura County industrial market had a vacancy rate of 2.9 percent, down 4 basis points from the 3.3% reported in the previous quarter. Sales and leasing activity was 2,81,7, broken out into 24 sales (725,1 ) and 49 leases (1,356,6 ). Sales and leasing activity has remained strong over the last two years as economic conditions in the overall economy continue to improve. Weighted average asking rental rates for direct space increased $.2 NNN P (3.4%) to $.6 per square foot, per month Triple Net (NNN). Rents have been slowly rising over the past two years as market conditions have tightened and industrial demand has increased. Development activity remains low relative to the amount of positive industrial demand. This quarter a single build to suit project was completed and 43,9 remains under construction, of which 226,6 (52%) are for build to suit projects. MARKET trends - >> Total vacancy rate declines to 2.9% HISTORICAL VACANCY VS RENTS Q1 211 - HISTORICAL net absorption & Construction COMPLETIONS V & Ventura County Industrial Market Q1 211 - >> Weighted average asking rental rate nn increases to $.6 P NNN >> Total gross activity at 2,81,7 >> There was positive demand with +835,8 net absorption >> 43,9 in construction activity $ P PER MONTH (NNN) $.62 $.6 $.58 $.56 $.54 $.52 $.5 $.48 RENTS VACANCY 1Q11 1Q12 1Q13 1Q14 1Q15 6% 5% 4% 3% 2% 1% % % VACANT (TOTAL) 1,, 8, 6, 4, 2, (2,) (4,) (6,) NET ABSORPTION CONSTRUCTION COMPLETIONS 1Q11 1Q12 1Q13 1Q14 1Q15 1 Colliers International continuously refines its database. As a result, data reflected in this report may not be consistent with data reported in previous quarters. www.colliers.com/losangeles
market Report industrial san FERNANDO VALLEY & VENTURA COUNTY vacancy The total vacancy rate has dropped 4 basis points over the quarter and has decreased 5 basis points from the 3.6% reported one year ago. net absorption In Q1, the market recorded positive absorption of 835,8 square feet as market fundamentals remained solid. This is the 6th consecutive quarter of positive industrial demand. >> Population: 1,136,59 (215 Estimate) 1,51,281 (22 Projection) 3.69% (Growth 215-22) >> Household income: $78,39 (Average) $54,514 (Median) >> Job growth: 2.4% (past 12 months) >> Unemployment rate: 7.8% (as of February 215) In terms of submarkets, the Central Valley Valley recorded the lowest vacancy rate (.5 percent) and the Simi Valley/Moorpark submarket recorded the highest vacancy rate (6.6 percent). The total availability rate decreased to 5.2 percent, the lowest availability rate experienced in the two years. The Simi Valley/Moorpark submarket continues to maintain the highest rate of availability at 1.9 percent. The tightness of the Central Valley submarket continues to benefit landlords in that submarket. The availability rate in Central Valley was 1.3 percent. UNEMPLOYMENT February 215 figures for nonfarm employment in Los Angeles County showed a recovering job market. Over the past 12 months, Los Angeles County has gained 11,1 jobs for an increase of 2.4 percent. This gain in employment led to the unemployment rate lowering to 7.8 percent from 8.7 percent a year ago. Year-over-year job gains were seen in Trade, Transportation, and Utilities (2,3 jobs) and Construction (6,9 jobs). The largest decline in jobs was seen in Manufacturing (3,5 jobs). VACANCY by Submarket NET ABSORPTION by submarket 7% 6% 5% 4% 3% 2% 1% %.5% 1.% 2.2% 2.4% 4.3% 4.9% 6.6% CENTRAL VALLEY EAST VALLEY WEST VALLEY SANTA CLARITA VALLEY WEST VENTURA COUNTY SIMI VALLEY/MOORPARK % VACANT 45, 4, 35, 3, 25, 2, 15, 1, 5, (5,) (1,) (43,7) 34,2 57,1 78,3 19,6 22,6 379,8 WEST VENTURA COUNTY SANTA CLARITA VALLEY SIMI VALLEY/MOORPARK CENTRAL VALLEY WEST VALLEY EAST VALLEY
market Report industrial san FERNANDO VALLEY & VENTURA COUNTY INDUSTRIAL OVERVIEW EXISTING PROPERTIES CONSTRUCTION VACANCY AVAILABILITY ACTIVITY ABSORPTION RENTS Submarket/ Building Size Bldgs Total Inventory Completions Current Qtr Under Construction Vacancy Vacancy Prior Qtr Availability Sales Number of Activity Sales Lease Activity Number of Leases Total Gross Activity Current Qtr Total Gross Activity YTD Net Absorption Current Qtr Net Absorption YTD Weighted Avg Asking Lease Rates WEST VENTURA COUNTY Subtotal 1146 41,919,7 92,7 4.9% 4.8% 6.4% 59,7 4 112, 6 171,7 171,7-43,7-43,7 $.56 SIMI VALLEY/MOORPARK Subtotal 32 11,13,5 6.6% 7.3% 1.9% 69,2 3 69,5 2 138,7 138,7 78,3 78,3 $.58 SANTA CLARITA VALLEY Subtotal 429 18,548,5 4.3% 4.5% 6.1% 13, 1 31,6 1 314,6 314,6 34,2 34,2 $.62 Subtotal 239 7,224,3 2.4% 3.1% 2.9% 128,6 2 128,6 128,6 57,1 57,1 $.74 WEST SAN FERNANDO VALLEY Subtotal 792 25,714,4 111,6 2.2% 3.1% 4.7% 239,2 6 246,8 11 486, 486, 22,6 22,6 $.64 CENTRAL SAN FERNANDO VALLEY Subtotal 43 13,819,.5% 1.3% 2.% 91,4 4 231,6 4 323, 323, 19,6 19,6 $.69 EAST SAN FERNANDO VALLEY Subtotal 1621 5,495,8 81,4 226,6 1.% 1.5% 4.% 124,1 4 395, 16 519,1 519,1 379,8 379,8 $.69 SAN FERNANDO VALLEY SUBTOTAL Subtotal 3286 19,69,8 81,368 226,6 1.8% 2.3% 4.2% 467,7 15 1,175,1 41 1,642,8 1,642,8 662,9 662,9 $.65 VENTURA COUNTY SUBTOTAL Subtotal 1665 59,42, 92,7 4.9% 5.% 6.7% 168,5 8 181,6 8 35,1 35,1 34,6 34,6 $.57 MARKET TOTAL 1, - 19,999 2,424 34,177,8.6%.7% 2.4% 164,4 13 227,6 16 392, 392, 18,1 18,1 $.72 2, - 39,999 1,484 39,93,9 111,6 1.4% 1.4% 3.6% 22,3 7 251,1 14 453,4 453,4 (7,4) (7,4) $.68 4, - 69,999 59 3,51,1 2.3% 2.7% 5.1% 41,3 1 168,5 6 29,8 29,8 159,1 159,1 $.64 7, - 99,999 191 15,82,9 81,4 92,7 5.1% 6.9% 7.5% 163,1 2 181,7 3 344,8 344,8 361,7 361,7 $.6 1,- 249,999 234 32,735,1 226,6 4.6% 5.4% 7.2% 154, 1 527,7 1 681,7 681,7 258,4 258,4 $.58 25, - 499,999 28 9,378,9 3.8% 3.8% 7.2% $.59 5,+ 8 6,73,5 1.7% 11.4% 1.7% 45,9 45,9 $.5 total 4,959 168,825,2 81,4 43,9 2.9% 3.3% 5.2% 725,1 24 1,356,6 49 2,81,7 2,81,7 835,8 835,8 $.61 Colliers International p. 3
market Report industrial san FERNANDO VALLEY & VENTURA COUNTY >> Asking rents have increased $.2 NNN P over the quarter >> The amount of square footage under construction totals 43,9 >> There was 2,81,7 of gross absorption for the quarter CONSTRUCTION There is 43,9 of space under construction that will be completed in the next twelve months. The majority of this space (52%) are build to suit projects that will not impact the vacancy rate. One major development in the pipeline is the IAC Commerce Center, a 1.3 million industrial development in Valencia. Land development is underway and construction could start in approximately 12 months. ACTIVITY Total gross activity was 2,81,7, broken down into 24 sales (725,1 ) and 49 leases (1,356,6 ). Significant deals this quarter include Agridora taking 7,8 of new space in Valencia, Ricoh Printing renewing on 62,6 of space in Simi Valley and Clamshell Structures renewing on 46,1 of space in Oxnard. The largest sale of the quarter was ProLogis purchasing a 168, fully leased building for $22,68, ($135 P). This deal was done at a 5.2% cap rate, demonstrating the high demand for fully leased class A assets. Large user sales this quarter include Hern Holdings purchasing a 88,1 building in Thousand Oaks for $9,885, ($112 P) and the Broeckman Family Trust purchasing a 74,1 building in San Fernando for $7.1 million ($96 P) and rental rates The weighted average asking rental rate increased $.2 P NNN to $.6 P. There has been upward pressure on average asking rental rates over the past two years as industrial demand has remained positive. Asking rents were highest in the Conejo Valley submarket at $.74 P NNN. Average asking rents were highest for buildings in the 1, to 19,999 square foot range at $.72 P NNN and lowest for the largest buildings, over 5, at $.5 P NNN. WEIGHTED AVERAGE ASKING LEASE RATES BY SUBMARKET GROSS ACTIVITY BY SUBMARKET $ P PER MONTH (NNN) $.8 $.7 $.6 $.5 $.4 $.3 $.2 $.1 $.56 $.58 $.59 $.62 $.62 $.69 $.74 6, 5, 4, 3, 2, 1, 128,6 138,7 171,7 314,6 486, 323, 519,1 $. WEST VENTURA COUNTY SIMI VALLEY/MOORPARK CENTRAL VALLEY WEST VALLEY SANTA CLARITA VALLEY EAST VALLEY SIMI VALLEY/MOORPARK WEST VENTURA COUNTY SANTA CLARITA VALLEY CENTRAL VALLEY WEST VALLEY EAST VALLEY
market Report industrial san FERNANDO VALLEY & VENTURA COUNTY outlook The San Fernando Valley remains a tight infill market with few development opportunities. It is a hub of specialty manufacturing and local population serving warehouse users. As national and regional economic conditions continue to improve, so too will market fundamentals within the San Fernando Valley. Tightening vacancy rates will lead to higher asking rental rates in future quarters. This makes the San Fernando Valley an attractive place for investors who are willing to explore secondary markets and go outside the boundaries of most core institutional players. market description The San Fernando Valley and Ventura County industrial market includes 168.8 million of standard industrial space, and represents 15 percent of the total industrial space in buildings 1, square feet and greater in the Los Angeles Basin. It is a moderately mature market, with 68 percent of its space built more than 2 years ago. The market is oriented toward small- to medium-sized manufacturers and distributors, with only 29 percent of its space contained in big box buildings (1,+ ). HISTORICAL GROSS ACTIVITY Q1 211 - UNEMPLOYMENT RATE United States, California & February 215 2,5, 2,, 9.% 8.% 7.% 6.% 5.8% 6.7% 7.8% 1,5, 5.% 1,, 5, 4.% 3.% 2.% 1.% 1Q11 1Q12 1Q13 1Q14 1Q15.% United States California Los Angeles County RECENT TRANSACTIONS & MAJOR DEVELOPMENTS SALES ACTIVITY PROPERTY ADDRESS SIZE SALE PRICE PRICE P BUYER SELLER 9545 San Fernando, Sun Valley 168, $22.68 Million $135 P ProLogis Invesco 941 De Soto, Chatsworth 154, $14.1 Million $92 P Rexford Industrial 941 De Soto, LLC 23 Corporate Center, Thousand Oaks 88,1 $9.9 Million $112 P Hern Holdings First Industrial Realty Trust 1388 Del Sur, San Fernando 74, $7.1 Million $96 P Boeckman Family Trust 1388 Del Sur Investors LEASING ACTIVITY PROPERTY ADDRESS LEASED LEASE TYPE BLDG TYPE LESSEE LESSOR 15853 Strathern, Van Nuys 112, Renewal Distribution Resteraunt Depot Prudential 239 Ward, Simi Valley 62,6 Renewal Manufacturing Ricoh Printing Systems America Ward Industrial Park 111 Maulhardt, Oxnard 46,1 Renewal Light Clamshell Structures Prudential 365 Camino Carillo, Camarillo 19,7 Direct - New Light Vivint Solar Rush Hinsdale Trust MAJOR DEVELOPMENTS PROJECT DEVELOPER SIZE SUBMARKET STATUS ESTIMATED COMPLETION 121 Arroyo, San Fernando Arroyo Storage 81,4 East San Fernando Completed 71 Ventura, Los Angeles BLT Enterprises 92,7 West Ventura County Under Construction Q2 215 Colliers International p. 5
market Report industrial san FERNANDO VALLEY & VENTURA COUNTY DEFINITIONS OF KEY TERMS USED IN THIS REPORT Total Rentable Square Feet: Industrial space in buildings with 1, or more of industrial space. Includes speculative as well as owner-occupied buildings. Excludes Research & Development (R&D) buildings (industrial buildings with at least 3% office build-out, 3/1 parking ratio and a high level of finish). Excludes space that is underconstruction or renovation. Direct Vacancy: Space in existing buildings that are vacant and immediately available during the quarter for direct lease or for sale, plus space that is vacant but not available for direct lease or sublease (for example, that is being held for a future commitment). Total Vacancy: Space in existing buildings that are vacant and immediately available during the quarter for direct lease, for sublease or for sale, plus space that is vacant but not available for direct lease or sublease. Total Available: All space that is being currently marketed for occupancy, includes space which may be currently occupied or which may be under construction or renovation. Net Absorption: Net change in occupied square feet from one period to the next (includes the impact of change in vacant space available for sublease). Gross Activity: Square feet sold or leased for all known transactions completed during the quarter. Excludes lease renewals. Excludes investment sale transactions. Weighted Average Asking Rental Rates: Weighted by square feet available for direct lease. Data is based on Triple Net rents, and excludes expenses such as taxes, insurance, maintenance, janitorial service and utilities. Reported on a monthly, per basis. Average Sales Price: Calculated using a straight average of actual sales transactions. Added (Net): Total square feet added during the quarter via construction completions, including renovated space returned to market, less total square feet taken off-market due to demolitions or conversions. Under Construction/Renovation: Includes buildings that are in some phase of construction, beginning with foundation work and ending with the issuance of a Certificate of Occupancy. Also includes buildings that are under going substantial renovation. Technical Note Colliers International is continuously refining its database. The data shown in the historical tables and graphics in this report have been adjusted to take into account these changes in the database. This report has been prepared by Colliers International for general information only. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers International does not guarantee, warrant or represent that the information contained in this document is correct. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This report and other research materials may be found on our website at www.colliers.com/losangeles. 52 offices in 67 countries on 6 continents United States: 14 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 18 >> $2.3 billion in annual revenue >> 1.7 billion square feet under management >> Over 16,2 professionals united states: V & Ventura County Office License No. 198231 1683 Ventura Boulevard, Suite J Encino, CA 91436 tel +1 818 95 58 FAX +1 818 325 4 ABRAHAM, JEFF Senior Associate DEGRINIS, JOHN R. Senior Executive Vice President, SIOR DUROSS, PATRICK B. Associate Vice President ERICKSON, CHRISOPHER. Associate ERICKSON, JOHN A. Senior Vice President MUMPER, HANS Executive Managing Director PUTNAM, RICK Managing Director Western Region Capital Markets STARITA, GIAN Vice President WEIRICK, BRENTON C. Senior Vice President Accelerating success. p. 6 Colliers International www.colliers.com/marketname