Rexford Industrial Powers Through Challenging Market Conditions with Strong Leasing Activity and Investment Performance
Rexford Industrial, a leading owner and operator of industrial properties in Southern California, recently reported its fourth-quarter 2024 earnings. Despite navigating choppiness in the market due to pandemic-era growth, macroeconomic uncertainty, interest rates, and political factors, Rexford's management team expressed confidence in the company's long-term outlook.
The infill markets where Rexford operates have seen a decline in rents, with quality products comparable to the company's portfolio experiencing a 1.5% sequential decline and an 8% year-over-year drop. However, this compares favorably to the broader infill markets, which are down 12.5% year-over-year. The larger box market in the Inland East and West has seen even steeper declines of approximately 25% year-over-year.
Rexford's superior infill locations, averaging 26,000 square feet, have continued to outperform historical trends. The company reported that its average executed lease rate on 8 million square feet of 2024 leasing activity was 19% higher than the overall infill market.
During the fourth quarter, Rexford's team delivered solid results, executing 1 million square feet of leasing at net effective leasing spreads of 55% and cash leasing spreads of 41%. The company also achieved annual embedded rent steps averaging 3.9%, demonstrating its ability to drive value creation through strategic investments.
The company highlighted the importance of market conditions in shaping its near-term growth, with Laura Clark, Chief Operating Officer, stating that while these factors are impacting Rexford's projected 2025 growth, the long-term outlook for supply/demand fundamentals and robust levels of regional consumption within the infill Southern California market remain intact.
The stabilization of three repositioning projects in the fourth quarter was also reported as a key highlight. These projects met or exceeded the company's forecasted stabilization timing and yields, demonstrating Rexford's ability to drive investment returns through targeted initiatives.
Mikayla Lynch, Director of Investor Relations and Capital Markets, welcomed Mike Fitzmaurice as the new CFO, noting that his appointment completes Laura Clark's planned promotion from CFO to Chief Operating Officer. The company expressed confidence in the expanded roles of both Mike and Laura in unlocking the full potential of Rexford's portfolio and driving future growth.
