Nice overview of the Southern California Industrial Market as it relates to Infrastructure and Logistics. Also a nice Availability Forecast and Analysis of Trends in the Marketplace. Feel free to contact me to discuss further.

1. SOUTHERN CALIFORNIA INDUSTRIAL & LOGISTICS
OVERVIEW
APRIL 2017
Ron Mgrublian
O: 562 968 1171
ron.mgrublian@cbre.com

2. TABLE OF CONTENTS
• Southern California Real Estate Overview
• Southern California Infrastructure & Logistics Overview
• User Trends
• Conclusion / Trends

3. SOCAL REAL ESTATE OVERVIEW

4. SOUTHERN CALIFORNIA INDUSTRIAL SUBMARKETS

5. SOUTHERN CALIFORNIA MARKET PERSPECTIVE
Base (SF) Vacancy (%) Availability (%) 2016 YTD Gross
Activity (SF)
2016 YTD Net
Absorption (SF)
Asking Lease Rate
($/PSF/MO)
Inland Empire 485,530,315 4.0 7.6 40,767,615 17,128,721 0.51
Orange County 254,741,828 1.6 3.4 13,021,236 906,717 0.84
South Bay 219,805,008 0.8 2.7 9,753,893 1,133,197 0.71
Greater San Fernando
Valley
173,071,604 1.2 4.9 4,856,355 (52,893) 0.77
Commerce/Vernon 162,213,548 0.9 4.5 7,068,706 803,666 0.59
San Gabriel Valley 150,508,951 0.9 3.2 6,390,608 2,187,177 0.78
Downtown Los
Angeles
124,208,407 1.9 5.6 1,586,914 195,135 0.86
Mid-Counties 109,467,205 0.9 1.8 4,715,657 (320,452) 0.71
Ventura 62,807,290 3.4 5.1 1,613,436 (195,484) 0.64
San Diego 191,293,649 4.5 7.4 13,310,266 1,019,914 1.13
SoCal Total 1,933,647,805 2.3 5.1 103,084,686 22,807,698 0.72
MAJOR MARKET TRENDS
• Active Industries: Food & beverage, garment & apparel, third-party logistics, e-commerce, furniture, and
manufacturing.
• Strengths: Every sector is strong, no weaknesses based on fundamentals.
• User lease rates and sale prices: Expect 4-6% rent growth in Class A & B product and 5-8% on sale prices in
2017.
• Forecast: Sustained activity, lease rate appreciation, limited supply of quality product and more development.
• Land pricing will be flat.
• Port volume will have moderate growth in 2016/2017.
• Overall trend: Very positive throughout 2017.
1. Los Angeles 1.2%
2. Orange County 1.6%
3. Oakland 1.7%
4. San Francisco Pen 1.9%
5. Detroit 2.7%
6. Miami 3.0%
7. Portland 3.4%
8. New Jersey Central 3.4%
9. Salt Lake City 3.5%
10. Chicago 3.9%
11. Palm Beach 3.9%
12. Inland Empire 4.0%
13. Seattle 4.1%
14. Las Vegas 4.2%
15. Milwaukee 4.3%
*National Average 4.9%
SOCAL INDUSTRIAL MARKET STATISTICS
TOP 15 U.S. INDUSTRIAL MARKETS

6. CBRE GLA/OC|
INDUSTRIAL ANALYSIS
Average Building Size Per Market
Market Sq. Ft.
San Diego 27,453
San Fernando Valley 36,177
Orange County 37,323
Ventura 37,419
Central LA 39,150
Mid-Counties 49,911
South Bay 50,996
San Gabriel Valley 51,506
Vernon/Commerce 56,230
Inland Empire East 84,983
Inland Empire West 91,201
Total Average 51,122
223 0
1,104
0
995
635
1,562
9,756
11,424
436
788771
28 0 0
1,465
263
1,471
8,481
11,320
342
1,275
0
2,000
4,000
6,000
8,000
10,000
12,000
OC
Ventura
SFV
CLA
SouthBay
MidCounties
SGV
IEW
IEE
Vernon/Commerce
SanDiego
Development Activity by Market
Under Construction 2016 Deliveries
000’s
CBRE SOCAL INDUSTRIAL ANALYSIS (10,000+ SQ. FT.)

7. GLA/OC INDUSTRIAL AVAILABILITY FORECAST
Source: CBRE Econometric Advisors, Q4 2016.
(%)

8. Average Annual Rent Growth Over the Next 6 Years by Region:
Los Angeles: 3.3% | Orange County: 4.9% | Inland Empire: -0.6% | San Diego: 2.7%
GLA/OC INDUSTRIAL ASKING LEASE RATE FORECAST
($/PSF/MO)
Source: CBRE Econometric Advisors, Q4 2016.

9. INVENTORY STOCK OF CLASS A SPACE
Source: CBRE Research, Q4 2016.

10. SOCAL INFRASTRUCTURE

11. WHY LA/LB?
TRANSPORTATION FLOWS FROM SHANGHAI TO NORTH AMERICA
Source: IMS Worldwide, 2013.
$1,321
$2,055
$1,200
$800
$2,341
Transit time is money!

12. PORTS OF LOS ANGELES & LONG BEACH
PORT
2015 TEU
VOLUME
2016 TEU
VOLUME
YOY Change (%)
1. Los Angeles 8,160,458 8,856,783 8.5%
2. Long Beach 7,192,066 6,775,171 (5.8%)
3. New York &
New Jersey
6,371,720 6,251,953 (1.9%)
4. Seattle/Tacoma
Alliance
3,529,441 3,615,752 2.4%
5. Savannah 3,737,400 3,644,521 (2.5%)
6. Virginia (Norfolk) 2,549,270 2,655,707 4.2%
7. Oakland 2,277,521 2,369,641 4.0%
8. Houston 2,130,540 2,182,720 2.4%
9. Charleston 1,916,381 1,943,171 1.4%
10. Everglades 1,060,507 1,037,226 (2.2%)
G L A / O C B A S I N + I N D U S T R I A L M A R K E T S T O P 1 0 U . S . P O R T S

13. GLA/OC DRAYAGE RATES
Below is a map representing the average drayage rates to various areas throughout Los Angeles, Orange County &
the Inland Empire from the Ports of Los Angeles & Long Beach.

14. According to ESRI, the 2016 estimated population in Southern California is approximately 18.8 million, making it the
second most populous combined statistical area in the nation. Through 2021, the Southern California region’s
population is expected to grow 4.6%, reaching 19.7 million residents.
2010-2016
Growth:
5.1%
2016-2021
Prj. Growth:
4.6%
SOUTHERN CALIFORNIA POPULATION DENSITY

15. GLA/OC HIGHWAY INFRASTRUCTURE + DRIVE TIME + POPULATION REACH
Nearly 70% of all the freight tonnage moved in the U.S. goes on trucks, according to the American Trucking Association.
Below is a SoCal drive time map from the Ports of Los Angeles & Long Beach with the respective population reach.

16. ONE-DAY TRUCK DRIVE REACH
A trucker can legally drive 11 hours per day, averaging out to roughly 575 miles per day. The population within a 575 mile
radius from the ports is nearly 50 million people. Below is a map showing a 575 mile reach and population from the Ports of
Los Angeles & Long Beach.

17. UPS & FEDEX HUBS
There are 14 UPS & FedEx shipping hubs spread out throughout Greater Los Angeles/Orange County

18. UPS & FEDEX OUTBOUND DELIVERY TIMES
F E D E X U P S

19. 15 Total
Airports
Home to 6 of
the top 100 Air
Cargo Airports
in the U.S.
An estimated 79% of the SoCal region’s air cargo is handled through Los Angeles International Airport (LAX). It is the
14th busiest cargo airport in the world and the 5th busiest in the United States. More than 50% of LAX air cargo activity
is international in origin or destination.
2015 Top 5 Air
Cargo Airports
in the U.S.
SoCal is home
to 6 of the Top
100 Air Cargo
Airports in the
U.S.
SOUTHERN CALIFORNIA AIRPORTS
AIRPORT
2015 AIR CARGO
VOLUME (Tons)
1. Memphis
(MEM)
4,290,638
2. Ted Stevens
(TNC)
2,630,701
3. Louisville
(SDF)
2,350,656
4. Miami (MIA) 2,005,175
5. Los Angeles
(LAX)
1,938,624
AIRPORT
2016 AIR CARGO
VOLUME (Tons)
1. Los Angeles
(LAX)
2,105,941
2. Ontario
(ONT)
567,295
3. San Diego
(SAN)
168,277
4. Burbank
(BUR)
53,303
5. Long Beach
(LGB)
18,840
6. Santa Ana
(SNA)
18,109

20. USER TRENDS

21. USER CHALLENGES AFFECTING BUSINESS
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22. SUPPLYCHAINCOSTS
HIGH
Not Consumer Acceptable Consumer Acceptable
Low Cost Position
Low Cost,
Acceptable Service?
High Service,
Acceptable Cost?
Superior
Service Position
SERVICE
HIGH
LOW
INFLECTION POINT
STRIKING THE RIGHT
BALANCE
THE BIG QUESTION FOR E-COMMERCE
More locations drive up cost

23. LATEST TRENDS IN USER BUILDING REQUIREMENTS
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24. CONCLUSION/TRENDS
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