Sales of smaller industrial properties in the $1 million-$3 million range drove increased activity in the San Gabriel Valley in the second quarter, where 2.6 million square feet was sold or leased, according to data provided by Jones Lang LaSalle Inc.

The activity marked a 30 percent increase over the 2 million square feet sold or leased in the first quarter. At 42 cents per square foot, asking rents in the region were relatively flat from the year-earlier period, but low vacancy is expected to push prices up in coming quarters.

“The market has generally been very, very tight for a while,” said Mark Takeichi, director of brokerage services at Charles Dunn Co. Inc.

The valley’s 5.1 percent second quarter vacancy rate is down from 6.2 percent in same period the previous year.

Most of the activity in the industrial market stemmed from owner-user sales to small businesses, most with ties to Asia-Pacific trade, logistics and food processing.

“We’ve seen a lot of sales, primarily because the interest rates are so low that it’s cheaper for these owner-operators to own a building rather than lease it,” Takeichi said.

While interest rates rose during the quarter, they are still at historic lows, which is putting pressure on buyers to close deals, he said.

“It’s uncertain as to where the market’s going to go, so those with the ability to buy definitely have an incentive to close deals now before (interest rates) go up,” he said.

New leases in the region tended to be no larger than 150,000 square feet, largely because big-box space was simply not available. The market’s largest property owner, Majestic Realty Co., benefits from low vacancy and is pushing lease rates aggressively, said Stuart C. Milligan, senior director at Cushman & Wakefield Inc.

In the next few years, average lease rates are expected to increase as tenants see few options other than moving farther east from the ports of Los Angeles and Long Beach and into the Inland Empire.

Several new projects scheduled to break ground this year are expected to relieve some of the pressure in 2014 as they come on line, said Natalie Bazarevitsch, senior managing director at CBRE Group Inc.

One of the buildings on the drawing board is a 168,000-square-foot Class A site at 13110 Louden Lane in Industry. The property was sold by McConnell Cabinets to CT Realty Investors of Newport Beach for $6.2 million in April. The 7.7-acre site houses a 45-year-old, 116,000-square-foot warehouse that is scheduled for demolition this summer. Its replacement is projected to come on line in the second quarter of 2014 and lease for around 50 cents per square foot, Milligan said.

“The property benefits from a great location just 15 or 20 minutes from areas like Commerce and Vernon and it will take advantage of the outmigration of food users looking for modern, larger buildings,” he said.

A 10-acre parcel at 300 N. Baldwin Park Blvd. in Industry is also being developed. When completed, it is expected to serve as a 235,000-square-foot warehouse for Jacmar, a food service distribution company now in 80,000 square feet in Irwindale.

– Karen E. Klein

Main Events

An 81,000-square-foot Class B industrial building at 15051 E. Don Julian Road in Industry sold for $7.5 million. The buyer of the five-acre site is K-Top’s Plastics Manufacturing Inc., which plans to occupy the property. The seller of the building, built in 1963, was Overton Moore Properties.

Coker Tire Co. exercised its option to purchase a 100,000-square-foot distribution and wheel manufacturing facility at 14955 E. Don Julian Road in Industry, it had been leasing since January. The company had a substantially smaller West Coast headquarters in Fresno before it moved to Los Angeles County. The 3.3-acre facility sold for $6.8 million; the seller was the Lim Family Trust.

Third-party logistics firm Frontline Freight leased 125,000 square feet at 13007 Crossroads Parkway in Industry for 46.5 cents a square foot. The Crossroads Business Park location is owned by Majestic Realty Co.

Majestic Realty Co. leased an older 120,000-square-foot building at 19700 Business Parkway in Industry to Tung Hsin Trading Corp., which sells jewelry boxes and supplies. The lease rate was 47 cents a square foot.

Quality Custom Distribution, a logistics firm owned by McDonald’s restaurant supplier Golden State Foods, leased 156,000 square feet at 14255 Lomitas Ave. in Industry. The company is expected to move in Aug. 1 on the seven-year deal, reported at 45 cents per square foot.

Quest Nutrition leased 54,895 square feet at 1100-1102 John Reed Court in Industry. The company makes high-protein snack bars and nutritional supplements; the lease rate was about 74 cents a square foot.