Why LA's Industrial Market Is One of the Country's Hottest

Demand is so strong in SoCal's industrial market that supply isn't remotely keeping up, especially in LA. It's a problem you want to have, but it's still a problem. We gathered some of the top players to talk about the latest trends at Bisnow's 5th annual SoCal Industrial Real Estate Event.

Rexford Industrial chairman Richard Ziman (right) says the geopolitical world is in chaos, with uncertainty in many places, especially China, and what  happens there affects here (it's a flat world these days). Even so, he doesn't see so many black clouds on the horizon here, especially for real estate, with jobs and housing growing. Investment capital is still coming to US markets from around the world. Richard gave the keynote, with UCLA Ziman Center for Real Estate director Stuart Gabriel moderating.

Our ground-up development experts say SoCal industrial is healthy overall, with low vacancies and rising rents, and the next three years will probably be similar. In fact, there aren't any US markets stronger than LA, though it's hard to find land for development. The Inland Empire has more land and development opportunities. Snapped: Partner Engineering & Science CEO Joseph Derhake, who moderated, Dedeaux Properties principal Brett Dedeaux, Panattoni Development Co CEO Adon Panattoni and Guthrie Development CEO Robert Guthrie.

Supply might be tight in LA, but that doesn't mean there aren't opportunities, according to our experts on the consequences of diminishing industrial supply. There's about 1B SF of SoCal industrial built before 1980, much of it in LA, and that stock offers an opportunity to redevelop older industrial properties to meet the demand for modern new space. Pictured: Voit Real Estate Services managing director Ian Britton, who moderated, and MBS Dynamic CIO Jitesh Raja.

Still, infill can be a tough proposition, our speakers explained. One reason is the developers of other asset classes want to tear down industrial and redevelop as something else, multifamily in particular. Industrial is seeing rent growth, but it's often not enough to justify a site's use as industrial. Here are Overton Moore Properties CEO Timur Tecimer; Lee & Associates-LA North/Ventura principal Michael Tingus; and Rexford Industrial co-CEO Howard Schwimmer.

Our acquisitions panel noted the IE is an especially good market in which to invest in industrial, since there's no indication demand is going to lag. Also, marketwide 36-foot clear heights are more common in newer properties, and e-commerce might drive demand for 40 feet. Snapped: Allen Matkins partner Richard Mallory, who moderated, Lee & Associates principal Steven Hatson, Watson Land Co president Jeffrey Jennison and Prologis president-Southwest Region Kim Snyder.

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