Warehouse Feasibility Study in the Los Angeles-Long Beach-Anaheim, CA Metro Area

Los Angeles: second in the nation, 23rd in its own list

Lending for warehouses and distribution buildings in this Southern California metro is a study in contrast. The metro ranks 2 of 184 for the class nationally and has a location quotient of 1.34x, yet within its own classes warehouses sit at 23 of 39. The approvals across FY2017 to FY2026 number 49 loans and $40.0 million, and a median of $400,000, 0.80x the national median for the class, keeps the tickets modest, a finding that separates the cell from the national class even while the metro ranks near the top for how many such loans it has. A national rank and a local rank answer different questions, and a reader should not blur them: the first asks how this metro compares with all others, the second how much of this metro's own borrowing goes to warehouses.

Amounts and geography

The middle half spans $150,000 to $939,000. The program split is 40 loans for 7(a) and 9 for 504, and the franchise share is withheld. No lender in this cell holds enough loans to be named. Los Angeles County supplies 41 of the loans and Orange County 8, so the metro's activity is overwhelmingly in the county of the same name.

FY2017 shows 0 loans and $0, a genuine empty year. After that: 5 loans in FY2021 ($8.1 million), 5 in FY2023 ($10.1 million), 7 in FY2024 ($3.1 million), 11 in FY2025 ($5.6 million) and 8 in FY2026 ($2.9 million). FY2018 through FY2020 plus FY2022 sit below the printing threshold. Neither outcome rate appears for Los Angeles, which leaves a lender with no floor to read from this cell. The class counts storage and distribution buildings together, and a county on the 2023 list places each loan in the metro.

Testing a Southern California warehouse project

A warehouse study should test the building's tenants or the owner-user's own volume, the lease structure and rent against comparable buildings, the cost of land or acquisition, and the cost of improvements. With the median under the national figure, a project far above $400,000 needs a reason. Debt service coverage must hold through a vacancy or a slow lease-up. If the borrower is an owner-user, the study should tie space needs to the business's forecast. An appraiser will value the building on market rent and sales comparables. Nothing printed here promises approval.