In Los Angeles, Orange County, Inland Empire, and Ventura County the AIR CRE which collects statistics on rents and vacancies have just published an eye-opening report.

Rents in the last twelve months have increased by 36% and asking rents for any vacancies have increased by 49%. This phenomenal event surely surpasses any inflation factor and will have a dramatic effect on existing tenants when they renew their leases.

Tenants have been enduring the pandemic for almost 3 years, with shortages of inventory, labor costs increasing, and ever-increasing prices in the cost of goods. Now a looming recession in the forecast with a slowing economy poses another hurdle for companies who require warehouse space. 

New construction for warehouse space rarely exists with the exception of the Inland Empire. Even in the Inland Empire, the price for warehouse space has nearly doubled in the last two years.

There has been very little in the way of sales for warehouse space. Tenants in the past have searched to purchase their own warehouse and now have been forced out of the market. In addition, it is now common for an investor who wants to purchase a property in the 4 county area, must pay as high as a 3 ½ to a 4% rate.

It is certain when a tenant’s lease expires, those who have no option to renew their lease or an option to renew at a fair market value may have to close their doors or wind up in a dispute with their current landlord.

These facts presented by the AIR CRE are frightening and indicative of an uncertain future.

Disclaimer: The content provided in this blog is intended for informational and educational purposes only. Nothing in this blog should be construed as legal advice or be used as a substitute for professional advice. The opinions expressed herein are solely those of the author and do not represent the views or opinions of any organization or entity that the author may be affiliated with. In no event shall the author be held liable for any actions taken based on the information provided. Any use of this blog in a court of law or in legal proceedings is expressly disallowed.

Contact us to schedule your complimentary consultation.

Lee Segal Commercial Real Estate Expert Logo

Segal Commercial
2221 Barry Ave., Suite 200
Los Angeles, CA 90064