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With all of the tragedies and strife we faced in 2020, including the massive loss of businesses shutdown due to COVID-19 and the tragic loss of lives throughout our communities, there were some industries that escaped harm and one of them was the industrial real estate market. Declared “essential business” during the pandemic, manufacturing and distribution facilities, as well as the different facets of the construction industry, survived and actually thrived in Los Angeles!

Comparing the results recently published by Co-Star Realty Information Inc., the San Fernando Valley as a whole closed out at $858 million at the end of 2020, which topped 2019’s industrial real estate sales volume of $746 million. The reason our San Fernando Valley industrial real estate survived and thrived was because it was insulated from economic loss. This includes warehousing, manufacturing, distribution and flex buildings, which were allowed to operate during the pandemic.

Within that business segment, construction companies, construction supply companies and manufacturers of construction materials could not have not been busier. Construction did very well during the pandemic which led to an outstanding sales volume, which in many cases exceeded 2019’s when there was no pandemic.

Unfortunately, the entertainment industry in Los Angeles, which makes up a large part of our industrial real estate market, was forced to shut down production at different times during the pandemic, although some companies did implement special COVID-19 protocols to keep things going.

In Burbank, one sign of ‘business as usual’ was Amazon’s long-anticipated lease of  650,000 square feet of space for a new distribution center at the Avion Burbank project on North Hollywood Way at San Fernando Road. All told, Amazon leased over 5,000,000 square feet of space throughout the Los Angeles North market and the Ventura sub-market during the pandemic. Clearly, Amazon has great plans for growth in this area.

As of early January 2021, construction and the industries servicing the construction trade, are still producing at top volume. Add to that the spike in home improvement projects taken on by those who have been forced to work from home and that has generated a lot of business for this segment.

Within our market the smaller industrial buildings of 10,000 square feet or under are doing quite well as any available space continues to generate multiple bids at high-end market prices. This is due to the scarcity of product available: owners of industrial real estate understand the value of their properties and are not selling. However, when they do sell, they want a premium for their property – and they are getting it.

As we move through this pandemic and the world starts opening up again, industrial real estate will continue to shine as a beacon in Los Angeles. At Triniti Partners, we don’t see a big decline happening anytime soon or a big increase in vacancies in this market. Instead, industrial real estate will continue to provide a stabilizing effect on the economy as we see a continued demand for it in North Los Angeles and the surrounding areas. From my vantage point, in the buying, selling and leasing of industrial real estate, it appears very healthy. 

While people may wish to leave Los Angeles for greener pastures elsewhere, where taxes are lower and there are fewer regulations, people still need to work here and don’t want to leave. Truth be told, this market offers better economic opportunities than many other areas, which is why when anything comes on the market in industrial real estate, it gets purchased right away, and when owners sell their property and move away, ten more people are coming in behind them to take over.

George Stavaris is partner and co-founder of Triniti Partners, Inc., a full-service commercial real estate firm specializing in acquisitions, dispositions and investments of industrial properties in North Los Angeles.

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