Industrial space in the San Gabriel Valley stayed remarkably tight in the fourth quarter, continuing a trend seen in the area over the past several years one that highlights a shortage of land available for new development.

Industrial vacancy rates actually rose in the October-December period to 1.6 percent, up from 1.2 percent in the third quarter and the same period last year. However, the slight uptick was likely due to the completion of nearly 1 million square feet of new space in the Gateway Point business park’s second phase, among the last large developments coming on line, said Jim Center of Grubb & Ellis Co.

“There continues to be very strong user demand with a tremendous amount of interest in the San Gabriel Valley,” Center said. “Anything available gets snapped up right away.”

Gateway Pointe Industrial Park is a 1.6 million square foot park on 70 acres at the cusp of the Valley in the Whittier area.

The strong demand was reflected in industrial asking rents, which were up again this quarter to 54 cents from 51 cents in the third quarter and 47 cents for the same period last year.

The area has ready access to several freeways and the port, and is largely populated by manufacturing and distribution companies that engage in import and export activity, making it an area of continuing growth as trade with China expands.

But with virtually no undeveloped land available for new construction, demand has forced companies looking for large spaces especially those of 300,000 square feet or more to move farther east into the Inland Empire. About the only other large development aside from Gateway Pointe: Majestic Realty Co.’s Grand Crossing business park, an even bigger development at the east end of the City of Industry that will total 6.5 million square foot when built out.

The shortage also has meant that despite high demand, total industrial sales and leasing activity in the San Gabriel Valley dropped to about 1.6 million square feet in the quarter from 2.1 million square feet a year ago.

“The San Gabriel Valley is almost entirely an infill market at this point,” said Anthony Brent of Lee & Associates. “There’s no land left for the development of industrial property.”

The Valley had about 1.8 million square feet of space absorbed during the year by either new leases or sales. Lease transactions accounted for 1.2 million square feet, Brent said.

Among the major deals, janitorial and sanitation supply distributor Lagasse Inc., a subsidiary of United Stationers Inc., leased 240,000 square feet of warehouse space on Workman Mill Road at Gateway Pointe, which is owned by the Southwest Carpenters’ Pension Trust and marketed by Cushman & Wakefield.

Granite Peak Partners bought an 110,000-square-foot building on a 4-acre site along Baldwin Park Boulevard for $7.1 million, then leased the space to Spring Air Partners, a local manufacturer for the national mattress company.

In November, El Monte mattress manufacturer Miracle Bedding Corp. bought a facility with about 85,000 square feet of industrial space for $7.3 million, or $86.61 per square foot on Capital Avenue in Industry.

The San Gabriel Valley’s office market tightened up as well, with a vacancy rate of 9.4 percent, down from 10.5 percent last quarter and 11 percent for the same period last year. Going rental rates for Class A office space were at $2.20, up from $2.19 last quarter and $2.06 from the fourth quarter of 2004.

“The industrial market has gone up more significantly and faster than office, but office is not far behind, and as vacancies get tighter we will see their rents move up as well,” Center said.

Saint-Gobain Calmar Inc., which manufactures molded plastic spray nozzles for beauty products and cosmetics, leased 18,000 square feet of surplus office space in Industry last month.

Brokers said they expected rents to stay high and the area to remain short on space for the foreseeable future.

“In the immediate future you will see such a tight market that it will keep upward pressure on lease rates,” Center said. “We are projecting a 10 to 15 percent increase this year if the demand-inventory equation holds steady.”