Trammell Crow & Clarion Unveil New 11-building Industrial Park in SoCal

Trammell Crow Co. and Clarion Partners have finalized The Center at Needham Ranch, an extensive 1.7 million-square-foot industrial park located in Santa Clarita, California. Initiated in 2017, the 11-building complex was fully leased by May 2023, housing tenants like DrinkPAK, LA North Studios, Illumination Dynamics, US AutoForce, and Amazon. The development includes significant office spaces.

Partnership with Santa Clarita

The project involved collaboration with the city of Santa Clarita to build and inaugurate the Needham Ranch Parkway. This new roadway, part of the 250-acre development, offers an alternate route connecting Newhall Avenue and Sierra Highway, ensuring improved access to the industrial park. The construction of this parkway was a key element of the development agreement, funded by Trammell Crow Co. (TCC).

Labor Market and Development Team

Needham Ranch addresses the demand for modern, Class A logistics space in the Santa Clarita Valley and the broader L.A. North industrial submarket. The area is attractive to industrial users due to its skilled labor pool and high quality of life. Oltmans Construction Co. was the general contractor for the project, with HPA Inc. serving as the architect and Alliance Land Planning & Engineering as the civil engineer. CBRE’s team managed marketing and leasing for the facilities.

Industrial Market Resilience

Mark Detmer of JLL Capital Markets highlighted the resilience of the Los Angeles and Inland Empire industrial markets. Despite a constrained lending market, there are positive signs such as increased demand for space and stabilization of treasury rates. Detmer anticipates a brighter outlook for the industrial market in these regions.

Rising Industrial Asset Prices

Nationally, the industrial development pipeline has been shrinking for six consecutive quarters, following two years of record deliveries. In Southern California, demand remains robust, with the average sale price of industrial properties up by 12.9% in 2023. This demand is driven by the bustling Ports of Los Angeles and Long Beach.

Rent Growth and Port Challenges

Southern California’s port regions have seen significant rent growth, although questions arise about sustainability due to competition from inland hubs like Salt Lake City and Phoenix. Additionally, the Port of Los Angeles faces challenges with its transition to green technology, affecting the reliability of its power supply and operations.

Occupancy Trends in Los Angeles

The industrial rent in Los Angeles rose to $14.80 per square foot in June 2024, with a vacancy rate of 7.7%. Despite a high vacancy rate of 4.5% in the second quarter of 2024, construction activity remains strong, with 52 properties under construction totaling 7.2 million square feet. However, most of this new space remains unleased, which could further increase vacancy rates if leasing activity does not pick up.