INDUSTRIAL MARKET REPORT Los Angeles 2nd 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 of all single and multi-tenant buildings greater than 10,000 sf, including owner occupied facilities. Available SF All of the available leasable space within a building, whether it is occupied or vacant, for direct lease or sublease space. Space can be available but not vacant, for example, if the landlord, or his agent, is marketing space that will be coming available at a future date because a tenant is planning to move. Vacant SF The total of the direct vacant square footage in a building that is being marketed. Net Absorption The net change in occupied square feet from quarter to quarter, expressed in square feet. Note This report reflects Direct Vacancy and Absorption, Sublease space is excluded. 2
Industrial Market Map 3
Los Angeles Industrial Overview Overview The Los Angeles industrial market closed out the second quarter of 2016 with a total of 794,431 square feet of positive net absorption. The LA South submarket recorded the most activity by absorbing 243,408 square feet in the second quarter. Construction activity remains active with 6.4 million square feet of new construction underway. 4PX Express inked the largest lease of the quarter with a 361,435 sf deal in the city of Commerce. # 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 4,669 201,995,737 8,609,139 3,079,107 1.5% 198,204 925,496 LA South 4,560 209,855,936 6,092,309 1,486,371 0.7% 243,408 411,344 LA Northwest 3,922 124,554,741 4,099,398 1,912,929 1.5% 193,262 228,523 LA East 3,787 161,547,879 4,917,868 1,474,856 0.9% 214,616 192,660 MidCounties 2,095 103,045,673 2,897,026 731,159 0.7% (55,059) 316,100 Grand Total 19,033 800,999,966 26,615,740 8,684,422 1.1% 794,431 2,074,123 # of Bldgs Inventory (SF) Sum of Direct Available SF Direct V acant (SF) Direct Vacancy Rate (%) Direct Quarterly Net Absorption (SF) YTD Direct Net Absorption (SF) LA Central 4,669 201,995,737 8,054,335 3,026,779 1.5% 172,386 909,754 LA South 4,560 209,855,936 5,503,547 1,432,592 0.7% 297,187 455,467 LA Northwest 3,922 124,554,741 3,688,421 1,871,996 1.5% 193,262 255,594 LA East 3,787 161,547,879 4,732,994 1,323,344 0.8% 99,109 74,163 MidCounties 2,095 103,045,673 2,473,947 729,152 0.7% (53,052) 318,107 Grand Total 19,033 800,999,966 24,453,244 8,383,863 1.0% 708,892 2,013,085 # of Bldgs Inventory (SF) Available Sublease (SF) Sublease Vacant (SF) Sublease Vacancy Rate (%) Sublease Quarterly Absorption (SF) YTD Sublease Net Absoprtion (SF) LA Central 4,669 201,995,737 554,714 52,328 0.0% 25,818 15,742 LA South 4,560 209,855,936 588,762 53,779 0.0% (53,779) (44,123) LA Northwest 3,922 124,554,741 410,977 40,933 0.0% - (27,071) LA East 3,787 161,547,879 184,874 151,512 0.1% 115,507 118,497 MidCounties 2,095 103,045,673 423,079 2,007 0.0% (2,007) (2,007) Grand Total 19,033 800,999,966 2,162,406 300,559 0.0% 85,539 61,038 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 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Historical Vacancy Rates by Use 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 Whse/Mfg Flex/R&D 2,500,000 2,000,000 Historical Net Absorption by Use 1,952,517 1,500,000 1,000,000 1,069,713 1,383,431 1,232,275 846,472 500,000-244,243 11,678 91,274 47,417 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 Whse/Mfg Flex/R&D 5
Statistics by Market # of Bldgs Inventory (SF) Total Vacant (SF) Sublease Vacant (SF) Vacancy Rate (%) Total Quarterly Absorption YTD Total Net Absorption (SF) LA South 4,560 209,855,936 1,486,371 53,779 0.7% 243,408 411,344 Carson-Compton/Rancho Dominguez 1,340 85,323,761 304,199-0.4% 290,986 238,304 Gardena/North Compton 877 31,239,155 326,443 16,040 1.0% (8,142) 399 Long Beach/Paramount/Signal Hill 919 28,158,178 191,575-0.7% 23,521 120,320 Torrance 755 36,231,931 486,326 31,939 1.3% (4,237) 77,907 LAX Area 579 24,695,900 173,566 5,800 0.7% (58,720) (25,586) Port District 90 4,207,011 4,262-0.1% - - LA Central 4,669 201,995,737 3,079,107 52,328 1.5% 198,204 925,496 Commerce/Vernon 2,278 125,578,831 1,818,675 35,078 1.4% (143,356) 490,397 CBD 1,536 48,495,481 976,966 17,250 2.0% 148,030 196,811 Outside Submarket Area 855 27,921,425 283,466-1.0% 193,530 238,288 LA East 3,787 161,547,879 1,474,856 151,512 0.9% 214,616 192,660 West 1,342 37,108,761 694,812-1.9% 113,556 88,772 Industry 1,213 75,096,536 576,739 4,000 0.8% (86,357) (151,058) 210 Corridor 656 25,944,896 42,751-0.2% 48,130 95,510 Pomona 576 23,397,686 160,554 147,512 0.7% 139,287 159,436 LA Northwest 3,922 124,554,741 1,912,929 40,933 1.5% 193,262 228,523 East 1,839 54,702,255 814,014 14,637 1.5% 192,930 (23,781) West 972 29,562,955 767,131 23,116 2.6% (57,428) (20,990) Santa Clarita 556 22,774,329 264,096 3,180 1.2% 32,148 106,057 Central 555 17,515,202 67,688-0.4% 25,612 167,237 MidCounties 2,095 103,045,673 731,159 2,007 0.7% (55,059) 316,100 LA Southeast 1,880 88,562,807 652,553 2,007 0.7% (140,895) 197,103 Buena Park/La Palma 215 14,482,866 78,606-0.5% 85,836 118,997 Grand Total 19,033 800,999,966 8,684,422 300,559 1.1% 794,431 2,074,123 6
Vacancy Rates & Asking Rates Vacancy Rate % 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 LA East 1.0% 1.1% 0.8% 0.8% 0.9% Whse/Mfg 0.9% 1.0% 0.7% 0.7% 0.8% Flex/R&D 2.4% 2.0% 2.2% 2.4% 2.1% LA Central 1.9% 1.8% 1.8% 1.6% 1.5% Whse/Mfg 1.9% 1.8% 1.8% 1.6% 1.5% Flex/R&D 3.8% 2.4% 2.3% 2.0% 2.2% LA South 1.5% 1.2% 0.8% 0.8% 0.7% Whse/Mfg 1.4% 1.1% 0.8% 0.8% 0.7% Flex/R&D 2.4% 1.5% 1.5% 1.3% 1.6% MidCounties 1.5% 1.4% 1.0% 0.7% 0.7% Whse/Mfg 1.6% 1.4% 1.0% 0.6% 0.7% Flex/R&D 0.9% 1.1% 1.2% 0.8% 0.8% LA Northwest 2.0% 1.9% 1.7% 1.7% 1.5% Whse/Mfg 1.6% 1.6% 1.5% 1.5% 1.3% Flex/R&D 5.3% 4.9% 4.2% 4.0% 4.3% Grand Total 1.6% 1.4% 1.2% 1.1% 1.1% Average Weighted Direct Asking Rate 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 LA East $0.75 $0.66 $0.67 $0.73 $0.80 LA Central $0.76 $0.82 $0.74 $0.75 $0.78 LA South $0.65 $0.67 $0.78 $0.77 $0.79 MidCounties $0.58 $0.59 $0.60 $0.63 $0.66 LA Northwest $0.70 $0.72 $0.73 $0.75 $0.77 Grand Total $0.67 $0.71 $0.73 $0.73 $0.76 7
Vacancy Rates & Asking Rates Vacancy Rate by Submarket 1.5% 1.5% 0.9% 0.7% 0.7% LA East MidCounties LA Central LA Northwest LA South Average Weighted Asking Rates by Submarket $0.80 $0.66 $0.78 $0.77 $0.79 LA East MidCounties LA Central LA Northwest LA South $2.50 Asking Lease Rate Range by Type (NNN) $2.00 $1.95 $1.50 $1.00 $0.50 $- $1.55 $0.74 $0.49 Whse/Mfg Flex/R&D $1.06 $0.69 8
Leasing & Absorption Property Name Largest Leases & Absorption Changes SF Occupied or Vacated Tenant Name Submarket Specific Use 660-700 W Artesia Blvd 457,960 T.J. Maxx LA South Whse/Mfg 5510-5650 Grace Pl 361,435 4PX Express LA Central Whse/Mfg 2700 E Imperial Hwy 323,374 idc Logistics, Inc. LA South Whse/Mfg 6281-6285 E Slauson Ave 224,232 Plastic Express LA Central Whse/Mfg 2230 E Carson St 198,292 Idea Nuova Inc LA South Whse/Mfg 18300 Central Ave 183,473 MyDyer Inc. LA South Whse/Mfg 13110 Louden Ln 168,000 Wayfair LA East Whse/Mfg 768 Turnbull Canyon Rd (128,810) Yankee Clipper Distribution Of California, Inc. LA East Whse/Mfg 5008 S Boyle Ave (129,269) Uno Clothing LA Central Whse/Mfg 3030 S Atlantic Blvd (200,000) 99 Only Stores LA Central Whse/Mfg Top Transactions Property Name Sale Price SF Sold Buyer Seller Submarket Specific Use 6130 E Sheila St $32,500,000 184,772 Church of Scientology Intl Guardian Life Insurance LA Central Whse/Mfg 4633 S Downey Rd $24,000,000 175,978 4633 Downey Acquisition LLC Packaging Property Associates LLC LA Central Whse/Mfg 16420-16424 Valley View Ave $18,000,000 145,119 16424 Valley View LLC Prologis MidCounties Whse/Mfg 9
New Construction Current New Construction by Submarket 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - LA East LA Central LA South MidCounties LA Northwest 10
Industrial Advisory Board Members CBRE Central MidCounties Northwest John Privett Jeff Stephens CBRE Rick McGeagh CBRE David Harding Laird Perkins Coldwell Banker Greg Barsamian Commercial Alliance Colliers International Will Smith Colliers International Steve Calhoun Colliers International Patrick DuRoss Cushman & Wakefield Daum Commercial Jerry Sackler Dave Hess Chris Sheehan John Erickson Cushman & Wakefield Chuck Berger Heger Industrial Jon Reno Mike Foley Daum Commercial Kevin Tamura 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 Voit Peter Castleton NAI Capital Chad Gahr David Young East South Ashwill & Associates Mitch Ashwill CBRE Brian Held CBRE Jason Chao Lynn Knox Will Kim Colliers International Tony Phu Cushman & Wakefield Stu Milligan Daum Commercial Charles Johnson Colliers International Chuck Littell Cushman & Wakefield Daum Commercial Gateway Business Properties Steve Bohannon Rudy Lara Andrew Lara Casey Mungo Mike Kantor Jeff Bethel Heger Industrial John Bowman Lee & Associates Christopher Bonney Todd Launchbaugh JLL Harvey Beesen Barry Hill NAI Capital Newmark Grubb Knight Frank Realty Advisory Group Ryan Campbell Lee & Associates David Bales Rich Horn NAI Capital Philip Attalla Rick Sheckter The Klabin Company David Prior Rustin Mork 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 Pablo Dresie Sam Vaden Mark Masliah Danny Teng Rebecca Johnson Director of Client Services - Northwest LA & Ventura Director of Client Services - South Bay Director of Client Services - Central Director of Client Services - West LA Director of Client Services - LA East Director of Client Services - SFV/Ventura 805-807-6291 mfoxworthy@xceligent.com 310-916-7394 pdresie@xceligent.com 305-335-7893 svaden@xceligent.com 818-634-8431 mmasliah@xceligent.com 626-319-3640 dteng@xceligent.com 310-663-0184 rjohnson@xceligent.com Tim Hayes Executive Director - AIR 213-687-8777 thayes@airea.com Produced in partnership with 12