What's up with the Mid-Cities market?
Duplicating last quarter's success, vacancy rates in the Mid-Cities industrial submarket fell, while most other industrial strongholds either saw vacancies pile up or at best could only hold their own.
The market has benefited in recent years from booming port traffic, spillover the South Bay couldn't handle. But imports have slowed along with the U.S. economy.
Moreover, the market, which includes Downey, Norwalk and nearby cities, is dominated by older, smaller warehouses not the giant, new 1 million-square-foot behemoths found in the Inland Empire.
But sometimes smaller, and closer, is better. Especially when diesel fuel is going for more than $5 a gallon.
"The demand is strong in the Mid-Cities area due to fuel costs distributors want to stay closer to the industrial market. Is it cost effective to go all the way out to the Inland Empire for cheaper rent?" said Clyde Stauff, senior vice president, Colliers International.
That sentiment was reflected in the vacancy rate, which fell to 1.3 percent from 1.4 percent in the first quarter. Also climbing was sales-and-lease activity, which hit 1.25 million square feet, up from 1.21 million square feet in the first quarter and 1.06 million a year ago, according to Grubb & Ellis Co.
However, even with its newfound desirability, landlords apparently felt the pressure of declining imports. The activity was moved along by landlords willing to strike a deal. Asking rents fell to 57 cents per square foot, down from 60 cents in the first quarter.
Industrial Market At a Glance
Inventory: 107 million square feet
Under Construction: 67,360 square feet
Asking Rents: 57 cents
- Cummins Transportation, a Columbus, Ind.-based diesel engine manufacturer, leased a 335,672-square-foot building at 6289 E. Slauson Ave. in Commerce for five years at 55 cents per square foot.
- Japanese conglomerate Mitsubishi, which has multiple operations in Cypress, leased a 335,420-square-foot building at 5757 Plaza Drive for five years at 66 cents per square foot.
- ENL Global, a logistics and transportation services company based in Commerce, leased a 307,833-square-foot building at 3420 Garfield Ave. for five years at 54 cents per square foot.
- DNP International, a distributor of raw ingredients in the food, nutritional supplement and other industries, moved from Whittier to a 236,590-square-foot building at 12802 Leffingwell Road in Santa Fe Springs. The five-year lease is for 76 cents per square foot.
- Bunzl, a U.K.-based outsourcer of food packaging that distributes to supermarkets, caterers and hotels, leased a 178,454-square-foot building at 15959 Piuma Ave. in Cerritos for an undisclosed price for 10 years.
- Valley Fruit & Produce Co., a produce wholesaler based in Los Angeles, leased a 117,616-square-foot building at 1320 E. Sixth St. for 10 years for $1.20 per square foot.
u Ross Organic Sales combined its Signal Hill office and Sylmar warehouse into a 128,640-square-foot building at 9770 Bell Ranch Road in Santa Fe Springs. The company leased the space for five years at 57 cents per square foot.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- SOUTH BAY/MID-CITIES: Port-Reliant Businesses Like Slips in Rates
- Special Report: Real Estate Quarterly
- SOUTH BAY/MID-CITIES: Port Slowdown Continues to Rock Area
- MID-CITIES: Area Bucks Trend as Sales and Lease Action Accelerates
- MID CITIES: Market Tightens Amid Port Traffic, Demand for Warehouses
- Ripple Effect From Slowdown at Ports
- MID CITIES: Dwindling Supply Slows Sales and Leasing in Industrial Market
- SUBMARKET: Lower Rents Help Keep Vacancy Rates From Rising