My quick summary of the first quarter of 2023:

• Sales transaction volume is down –Quickly rising interest rates, sticky inflation, and a potential recession have significantly impacted the prices investors are comfortable paying for real estate. As a result, the “bid ask spread” for properties has widened and many transactions have been cancelled or sellers have decided to hold, resulting in less transactions. The April 1 deadline for the “Mansion Tax” did not translate into a large number of industrial sales. Industrial continues to be the asset where investors want to keep their money.

• Buyers are still active, but more selective – There is plenty of capital available for industrial properties in core markets like LA North, but the pricing is currently in an adjustment phase.

• The vacant available rate has ticked up slightly to 1.8% - This is still historically very low for our market.

• Asking lease rates are coming down – There is still demand for industrial real estate, however there are fewer active requirements in the market and more availability on the way. 

• Limited new construction – Outside of Simi Valley, there is limited new development for distribution space which will help prop up lease rates and keep vacancy historically low.