INDUSTRIAL MARKET REPORT Los Angeles 3rd Quarter 2016 Produced in partnership with
Table of Contents/ Methodology of Tracked Set Xceligent is a leading provider of verified commercial real estate information which assists real estate professionals, appraisers, owners, investors and developers that make strategic decisions to lease, sell, buy and develop commercial properties. Table of Contents and Methodology/Map 2-3 Market Overview 4-5 Statistics by Market 6 Vacancy Rates & Asking Rates 7-8 Leasing & Absorption 9 New Construction 10 Industrial Advisory Board Members 11 Xceligent Team 12 The Los Angeles tracked set consists of an inventory of buildings considered to be competitive by the brokerage community. All buildings within the competitive tracked set have been reviewed and verified by members of the Advisory Boards for the market area. Tracked Inventory (Industrial) The total square feet (sf) of all existing single and multi tenant industrial properties greater than 10,000 sf. Direct Vacant (sf) The total of the vacant square footage in a building that is being marketed by an agent representing the landlord. Net Absorption The net change in physically occupied space from quarter to quarter, expressed in square feet. Sublease (sf) Space that is offered for lease by a current tenant, or his agent, within a property. Whether the tenant is paying rent or not, the space is considered vacant only if it is unoccupied. Total Available (sf) All of the available leasable space within a building, whether it is occupied or vacant, for direct lease or sublease space. Total Vacant (sf) The total of all of the vacant square footage within a building, including both direct and sublease space. 2
Industrial Market Map 3
Los Angeles Industrial Overview Overview The Los Angeles industrial market closed out the third quarter of 2016 with a total of 1,194,190 square feet (sf) of positive net absorption, lowering the vacancy rate to 1.0%. The LA Northwest (SFV) submarket recorded the most activity by absorbing 600,620 sf. Construction activity remains active with 6.5 million sf of new construction underway. UPS inked the largest lease of the quarter with a 525,400 sf deal at the new Brickyard project in Compton. # of Bldgs Inventory (sf) Total Available (sf) Total Vacant (sf) Total Vacancy Rate (%) Total Quarterly Net Absorption (sf) YTD Total Net Absorption (sf) LA Central 4,660 202,284,167 8,446,391 2,643,742 1.3% 551,335 1,433,588 LA South 4,526 207,497,104 6,520,671 1,909,181 0.9% -388,320 23,024 LA Northwest 3,886 122,565,449 4,055,666 1,391,225 1.1% 600,620 829,143 LA East 3,743 156,743,211 4,788,062 1,390,277 0.9% 210,073 421,443 MidCounties 2,039 100,773,978 2,444,162 509,228 0.5% 220,482 532,805 Overall 18,854 789,863,909 26,254,952 7,843,653 1.0% 1,194,190 3,240,003 # of Bldgs Inventory (sf) Direct Available( sf) Direct Vacant (sf) Direct Vacancy Rate (%) Direct Quarterly Net Absorption (sf) YTD Direct Net Absorption (sf) LA Central 4,660 202,284,167 6,911,179 2,631,143 1.3% 511,606 1,378,117 LA South 4,526 207,497,104 6,044,411 1,849,078 0.9% -381,996 73,471 LA Northwest 3,886 122,565,449 3,432,062 1,368,109 1.1% 582,803 838,397 LA East 3,743 156,743,211 4,390,882 1,361,627 0.9% 87,211 180,084 MidCounties 2,039 100,773,978 1,990,024 483,810 0.5% 220,482 534,812 Overall 18,854 789,863,909 22,768,558 7,693,767 1.0% 1,020,106 3,004,881 # of Bldgs Inventory (sf) Available Sublease (sf) Sublease Vacant (sf) Sublease Vacancy Rate (%) Sublease Quarterly Absorption (sf) YTD Sublease Net Absoprtion (sf) LA Central 4,660 202,284,167 1,535,212 12,599 0.0% 39,729 55,471 LA South 4,526 207,497,104 476,260 60,103 0.0% -6,324 50,447 LA Northwest 3,886 122,565,449 623,604 23,116 0.0% 17,817 (9,254) LA East 3,743 156,743,211 397,180 28,650 0.0% 122,862 241,359 MidCounties 2,039 100,773,978 454,138 25,418 0.0% - 2,007 Overall 18,854 789,863,909 3,486,394 149,886 0.0% 174,084 235,122 4
Los Angeles Industrial Overview Historical Vacancy Rate & Net Absorption 2,500,000 2,000,000 1,500,000 1,000,000 500,000-2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Historical Vacancy Rates by Use Whse/Mfg Flex/R&D 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2,500,000 Historical Net Absorption by Use Whse/Mfg Flex/R&D 2,000,000 1,500,000 1,000,000 500,000-2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 5
Statistics by Market # of Bldgs Inventory (sf) Total Vacant (sf) Sublease Vacant (sf) Vacancy Rate (%) Total Quarterly Absorption (sf) YTD Total Net Absorption (sf) LA South 4,526 207,497,104 1,909,181 60,103 0.9% -388,320 23,024 Carson-Compton/Rancho Dominguez 1,324 84,144,178 614,587 18,253 0.7% -307,388-69,084 Gardena/North Compton 872 30,655,869 368,934 16,040 1.2% -42,491-42,092 Long Beach/Paramount/Signal Hill 917 27,837,093 225,136 0 0.8% -33,561 86,759 Torrance 746 35,995,926 441,678 25,810 1.2% 76,138 154,045 LAX Area 577 24,657,027 258,846 0 1.0% -85,280-110,866 Port District 90 4,207,011 0 0 0.0% 4,262 4,262 LA Central 4,660 202,284,167 2,643,742 12,599 1.3% 551,335 1,433,588 Commerce/Vernon 2,276 126,044,151 1,543,741 12,599 1.2% 269,695 765,331 CBD 1,533 48,431,414 912,235 0 1.9% 185,940 334,269 Outside Submarket Area 851 27,808,602 187,766 0 0.7% 95,700 333,988 LA East 3,743 156,743,211 1,390,277 28,650 0.9% 210,073 421,443 West 1,339 36,735,855 825,963 13,375 2.2% -131,151-23,669 Industry 1,196 72,943,296 473,393 15,275 0.6% 228,840 77,782 210 Corridor 633 23,768,118 54,692 0 0.2% -11,941 83,569 Pomona 575 23,295,942 36,229 0 0.2% 124,325 283,761 LA Northwest 3,886 122,565,449 1,391,225 23,116 1.1% 600,620 829,143 East 1,837 54,734,385 621,805 0 1.1% 271,125 247,344 West 958 28,507,662 483,119 23,116 1.7% 284,012 263,022 Santa Clarita 542 21,947,320 212,055 0 1.0% 52,041 158,098 Central 549 17,376,082 74,246 0 0.4% -6,558 160,679 MidCounties 2,039 100,773,978 509,228 25,418 0.5% 220,482 532,805 LA Southeast 1,824 85,473,979 429,501 25,418 0.5% 221,603 414,929 Buena Park/La Palma 215 15,299,999 79,727 0 0.5% -1,121 117,876 Overall 18,854 789,863,909 7,843,653 149,886 1.0% 1,194,190 3,240,003 6
Vacancy Rates & Asking Rates Vacancy Rate % 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 LA East 1.1% 0.8% 0.9% 0.9% 0.9% Whse/Mfg 1.1% 0.7% 0.8% 0.9% 0.8% Flex/R&D 2.0% 2.2% 2.4% 2.2% 2.9% LA Central 1.8% 1.8% 1.7% 1.6% 1.3% Whse/Mfg 1.8% 1.8% 1.6% 1.5% 1.3% Flex/R&D 2.6% 2.5% 3.2% 2.6% 2.9% LA South 1.2% 0.9% 0.8% 0.7% 0.9% Whse/Mfg 1.1% 0.8% 0.8% 0.7% 0.9% Flex/R&D 1.6% 1.6% 1.4% 1.6% 1.7% MidCounties 1.4% 1.0% 0.6% 0.7% 0.5% Whse/Mfg 1.4% 1.0% 0.6% 0.7% 0.5% Flex/R&D 1.0% 1.0% 0.8% 0.9% 0.8% LA Northwest 1.9% 1.8% 1.8% 1.6% 1.1% Whse/Mfg 1.6% 1.6% 1.6% 1.4% 1.0% Flex/R&D 5.0% 4.3% 3.9% 4.2% 2.5% Overall 1.5% 1.3% 1.2% 1.1% 1.0% Weighted Average Asking Rent (NNN) 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 LA East $0.66 $0.67 $0.73 $0.80 $0.75 LA Central $0.84 $0.78 $0.75 $0.78 $0.68 LA South $0.66 $0.78 $0.77 $0.79 $0.81 MidCounties $0.59 $0.60 $0.63 $0.66 $0.68 LA Northwest $0.72 $0.74 $0.74 $0.78 $0.80 Grand Total $0.71 $0.74 $0.73 $0.76 $0.76 7
Vacancy Rates & Asking Rates Vacancy Rate by Market 1.3% 1.1% 0.9% 0.9% 0.5% LA East MidCounties LA Central LA Northwest LA South Weighted Average Asking Rent by Market (NNN) $0.80 $0.81 $0.75 $0.68 $0.68 LA East MidCounties LA Central LA Northwest LA South $2.50 Asking Rent Range by Use (NNN) $2.00 $1.50 $1.00 $0.50 $- $1.69 $0.73 $0.46 Whse/Mfg $1.98 $1.08 $0.69 Flex/R&D 8
Leasing & Absorption Property Name Largest Leases & Absorption Changes Occupied or Vacated (sf) Tenant Name Submarket Specific Use 1430 N McKinley Ave 525,400 UPS LA South Whse/Mfg 2201 E Carson St 521,856 Sony LA South Whse/Mfg 4415 Bandini Blvd 264,594 Millennium Products LA Central Whse/Mfg 11063 Pendleton St 264,068 OnTrac LA Northwest Whse/Mfg 15927 Distribution Way 220,000 American Cargo Express, Inc. Midcounties Whse/Mfg 2652 Long Beach Ave 149,738 Worldwide Produce LA Central Whse/Mfg 2501 W Rosecrans Ave (115,000) Avalon Cold Storage LA South Whse/Mfg 2910 E Pacific Commerce Dr (150,000) American Logistics International LA South Whse/Mfg 4615 Alcoa Ave (216,809) Vig Furniture, Inc. LA Central Whse/Mfg Top Transactions Property Name Sale Price Sold (sf) Buyer Seller Submarket Specific Use 20550 Normandie Ave $43,000,000 438,219 Bridge Point South Bay LLC Farmer Brothers Co LA South Whse/Mfg 498-502 N Oak St $30,000,000 213,000 The Marvin Group The Rader Company LA South Whse/Mfg 13110 Louden Ln $29,000,000 168,000 PNC Realty Investors Inc CT Realty LA East Whse/Mfg 9
New Construction Current New Construction by Submarket 2,500,000 2,213,529 2,000,000 1,500,000 1,469,940 1,000,000 740,452 1,088,398 1,013,980 500,000 - LA East LA Central LA South MidCounties LA Northwest 10
Industrial Advisory Board Members Central MidCounties Northwest CBRE John Privett CBRE Rick McGeagh CBRE David Harding Jeff Stephens Laird Perkins Coldwell Banker Commercial Alliance Greg Barsamian Colliers International Will Smith Colliers International Steve Calhoun Colliers International Patrick DuRoss Cushman & Wakefield Dave Hess Chris Sheehan John Erickson Daum Commercial Jerry Sackler Cushman & Wakefield Chuck Berger Daum Commercial Kevin Tamura Heger Industrial Jon Reno Mike Foley Delphi Business Properties David Hoffberg JLL Paul Sablock JLL Cameron Driscoll Jeff Puffer NAI Capital Philip Attalla Luke McDaniel JLL Bart Reinhard The Quantum Associates Iqbal Hassan Lee & Associates Tim Cronin Lee & Associates Randy Kobata Voit Dave Fults Joel Hutak NAI Capital Chad Gahr Voit Peter Castleton David Young East South Ashwill & Associates Mitch Ashwill CBRE Brian Held CBRE Jason Chao Colliers International Chuck Littell Lynn Knox Cushman & Wakefield Steve Bohannon Colliers International Will Kim Daum Commercial Rudy Lara Tony Phu Daum Commercial Andrew Lara Cushman & Wakefield Stu Milligan Daum Commercial Casey Mungo Daum Commercial Charles Johnson Gateway Business Properties Mike Kantor Lee & Associates Jeff Bethel Heger Industrial John Bowman Christopher Bonney JLL Harvey Beesen Todd Launchbaugh JLL Barry Hill NAI Capital Ryan Campbell Lee & Associates David Bales Rich Horn NAI Capital Philip Attalla Newmark Grubb Knight Frank Rick Sheckter The Klabin Company David Prior 11
Xceligent Los Angeles Team This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy. For more information, please contact : Matt Nelson Director of Analytics 714-509-1404 mnelson@xceligent.com Monique Ebel Director of Research 714-538-8432 mebel@xceligent.com Mike Foxworthy Director of Client Services - National Accounts 805-807-6291 mfoxworthy@xceligent.com Pablo Dresie Director of Client Services - South Bay 310-916-7394 pdresie@xceligent.com Sam Vaden Director of Client Services - Central 305-335-7893 svaden@xceligent.com Mark Masliah Director of Client Services - West LA 818-634-8431 mmasliah@xceligent.com Danny Teng Director of Client Services - SGV 626-319-3640 dteng@xceligent.com Rebecca Johnson Director of Client Services - SFV/Ventura 310-663-0184 rjohnson@xceligent.com Tim Hayes Executive Director - AIR 213-687-8777 thayes@airea.com Produced in partnership with 12