Vernon
Vernon is a 5.2-square-mile industrial city immediately south of downtown Los Angeles, bordered by Maywood, Commerce, and the city of Los Angeles with about 1,800 businesses. It is one of the densest concentrations of food processing, cold storage, and light manufacturing in Southern California.
What an Operator Sees
I see a hard to replace asset at $329/SF and 300K SF of land. Food process and cold storage require a lot of equipment making it hard and expensive for tenants to move and they require a lot of power that this building already has. I'm tracking this because I am interested in looking outside of multifamily for investing with vacancy rates currently at about 5.4% in Los Angeles. Vernon is running tighter at 4.4%. In 2022 we hit record lows of 1.6% vacancy. Industrial remains in short supply as e-commerce, manufacturing, and logistics drive more demand for warehouse space. The long term story is simple: more online shopping, limited land and a shortage of industrial space will continue to support rents and values. There simply isn't enough land to satisfy long term demand and replacement costs are not going to go down.