SUBMARKET: Net Absorption Climbs to Positive Numbers

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The San Gabriel Valley industrial market was a bright spot in Southern California’s real estate world last quarter.

Vacancies fell three-tenths of a point to 2.2 percent during the fourth quarter, but the best news came in the form of the net absorption figures. They climbed out of the red and skyrocketed more than 1.5 million square feet since the third quarter to nearly 365,000 square feet, according to Grubb & Ellis Co.

Chris Bonney, president of the City of Industry office of Lee & Associates, said the valley has fared better than many other industrial markets since most tenants are more stable small to medium-size companies with a single U.S. facility.

“In Ontario you might have a large retailer that has five distribution centers across the United States. When demand slacks, they close one facility or they downsize,” noted Bonney. “The typical owner of a building in the City of Industry is a privately held company that’s not going to be looking to downsize as quickly.”

Rents dropped a nickel to 50 cents during the quarter, while sale and lease activity remained steady at around 600,000 square feet. The picture isn’t as rosy, however, when compared with fourth quarter 2007, when vacancies were one point lower and sale and lease activity was 75 percent higher.

In one of the quarter’s larger deals, L.A. County purchased a 120,000-square-foot industrial facility in City of Industry from PHD Properties for $13.7 million. Bonney, who represented the seller, said the price was close to market average during the first half of the year.


Industrial Market At a Glance

Inventory: 173 million square feet

Under Construction: 625,880 square feet

Asking Rents: 50 cents


MAIN EVENTS


– J.H. Properties bought the Valley Pacific Business Center for $6 million from the Industry Urban Development Agency. The business center at 20862-20976 Currier Road and 605-621 Brea Canyon Road includes 16 buildings ranging from 1,600 to 14,400 square feet.

– Los Angeles County purchased a 120,000-square-foot industrial facility in City of Industry from PHD Properties for more than $13.7 million. The county will use the property at 16610 Chestnut St. for storage of unclaimed personal property of the deceased.

– A subsidiary of food service wholesaler Restaurant Depot acquired an industrial building in Walnut for $9.25 million from Liu Living Trust. The 70,400-square-foot building, at 20405 E. Walnut Drive, has eight loading docks and one drive-in bay.

– Fallon-Rambeau Properties LLC purchased a portfolio consisting of six warehouse buildings at 9850-9860 Rush St. in South El Monte. An investment group led by the Helen O. Williamson Trust sold the group of buildings for a total consideration of $3.15 million.

– Individual investors sold a 52,500-square-foot industrial building at 1625 S. Greenwood Ave. in Montebello to Jade Apparel Inc. for almost $6 million.

– Cafe Logistics paid nearly $12 million for two City of Industry industrial buildings. The deal covered a 52,469-square-foot property at 15205-15235 Stafford St. and a 52,000-square-foot building at 15210-15232 E. Nelson Ave. Washington-based real estate equity fund Multi-Employer Property Trust sold both buildings.

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