An increase in commercial sales pushed up activity in the San Gabriel Valley industrial market, with third-party logistics firms particularly eager to buy at what they perceive is the market’s bottom.
The region’s vacancy rate dropped to 5.5 percent, down seven-tenths of a point from the second quarter, according to Jones Lang LaSalle Inc. Nearly 2.2 million square feet were sold or leased over the period, up from 2 million in the previous quarter.
Scarcity played a factor in the sales spike, with prices in the region beginning to inch up as demand exceeds supply.
“There’s a huge pent-up demand of users looking to buy buildings, but inventory and availability of industrial buildings in this market has dwindled quite a bit,” said Jim Center, senior vice president with Newmark Grubb Knight Frank in the City of Industry. He added that many companies are looking to buy properties while interest rates remain low.
Even buyers turning to Class B properties paid top dollar in many cases, said Tony Phu, an executive vice president with Colliers International in Ontario. He pointed to the sale of 489 Yorbita Road in La Puente, a 31,500-square-foot Class B property that went for $3.8 million, or $122 per square foot, as “a pretty high price.”
Overall asking rents have stabilized in the past year and dropped just a penny to 42 cents in the second quarter. But Class A sapce in the 300,000-square-foot range is up around 50 cents, Center said.
“With supply bottled up, there’s a floor on pricing. We saw an increase in availability in 2008 and 2009, but that has been made up” by robust activity in the past couple of years, he said. “Now, there’s not a lot of land left, as opposed to the years when we had a lot of new construction.”
Jones Lang LaSalle reported 74,000 square feet under construction.
Kent Valley, a senior vice president at Majestic Realty, said tenants have been renewing at about the same rate they’ve been paying.
But he noted that the Chinese economy has been slowing, and if that continues into 2013, it might negatively affect the San Gabriel Valley market, which is popular with many import-export firms that do business with Asia.
“It’s going to be interesting to see, from a leasing standpoint, what happens,” Valley said.
Main Events
Mattel Inc. subleased 619,200 square feet at 15930 Valley Blvd. in the City of Industry to Amerifreight, a third-party logistics firm that currently has more than 2 million square feet of space in the San Gabriel Valley and Inland Empire. The eight-year sublease is a joint expansion and consolidation; value was estimated at $20 million.
Dragonis Investments LLC sold a 31,500-square-foot building at 489 Yorbita Road in La Puente to Capital-C Investments LLC, a Temple City property management and real estate firm. The building sold for $3.8 million.
Pacific Equity Partners sold a 184,455-square-foot warehouse property at 2801 S. Towne Ave. in Pomona to JNAR Investment LLC. The Class B property, built in 1982, is newly renovated on 15 acres. Financial terms of the deal were not disclosed.
Dealer Tire leased 155,000 square feet at 4981 Fourth St. in Irwindale at the Irwindale Business Center, built in 2001. The landlord is LIT Finance. The six-year lease was estimated at $4.8 million.
HHC Investment Group bought a 108,000-square-foot warehouse from OMP Amar LLC at 730 Baldwin Park Blvd., Suite 730, in the City of Industry. The property, built in 1972, sold for $8.2 million.
Pelican Paper, which has local offices in San Bernardino, subleased 76,800 square feet from RPM Management at 19514 San Jose Ave. in the City of Industry. Financial details of the deal were not disclosed.
