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Last week we reported that Watson Land Co. has seen impressive demand from South Bay industrial property users.
The developer’s marketing success should come as no surprise, according to a report The Seeley Co. released last week.
Seeley notes that vacancies at better South Bay industrial buildings are now at their lowest point since 1990, having dropped from 8.9 percent a year ago to 7.1 percent today. That has helped South Bay “Class A” industrial landlords boost rental rates 10 percent during the year.
And a just-released report from the American Industrial Real Estate Association concludes that demand for industrial space was up dramatically in 1996 within the entire five-county Los Angeles Basin that’s L.A., Ventura, San Bernardino, Riverside and Orange.
The amount of industrial space sold in the region during the year totaled more than 10.5 million square feet, up 46 percent from the 7.2 million square feet sold in 1995, according to AIR figures.
Industrial leasing activity in the region was also up substantially in 1996, with more than 29 million square feet leased vs. 26.6 million in 1995. That amounts to about a 10 percent increase.
December proved to be a particularly noteworthy month at least relative to November. Leasing activity was up 30 percent, while those late-year transactions boosted sales activity about 54 percent.
And indicating more development activity ahead in the post-recession era, better than 29 million square feet of industrial-zoned land was sold in the five-county region during 1996. That figure represents a 37 percent increase over 1995 land sales, according to the AIR.
‘Spec’ projects slated
Among the groups buying land and going ahead with speculative industrial developments are Haymur California and CGM Development.
The former, based in Santa Ana, and the latter, based in the City of Industry, have just purchased sites within Industry’s Rowland Industrial Center. Both are expected to break ground on new projects within the next 60 days, according to Steve Mooradian at brokerage Lee & Associates, who handled the land sales and is marketing both projects.
Haymur’s $18 million project will include four buildings with just under 340,000 square feet on 16 acres. And CGM’s $5 million development is to include three buildings totaling just under 80,000 square feet on four acres.
AEW buys LAX-area project
Among the latest indications of investors’ demand for industrial facilities, the institutional investment advisory outfit AEW Capital Management LP has purchased a fully leased 148,42-square-foot complex near LAX for $9.7 million.
AEW Capital Management is the combined forces of Boston-based giants Aldrich Eastman & Waltch and Copley Real Estate Advisors, which just merged.
The 6.3-acre project at 8492-8506 Osage Ave. in Westchester includes a 93,000-square-foot building leased to Air Express International and a 55,000-square-foot sister building leased to Citizen Watch Co. of America.
The seller is a Citicorp affiliate.
Zelman Development Co. completed the project in 1982 and still manages the property, said The Klabin Co.’s Harvey Beesen and Jim Sullivan, who brokered the sale.
Magic’s group buys another
In the local retail arena, the investment team headed by former Los Angeles Lakers superstar Earvin “Magic” Johnson, real estate investment advisor Victor MacFarlane and the California Public Employee Retirement System has made its second shopping center acquisition in an underserved neighborhood.
The team’s California Urban Investment Partners program purchased a 75 percent interest in the 76,744-square-foot Margarita Plaza retail center in Huntington Park, about six miles south of downtown L.A.
The 1989-vintage property at Florence and Santa Fe avenues includes five buildings, fully leased to such tenants as Food 4 Less, Radio Shack, Chief Auto Parts and Anna’s Linens.
The Johnson/MacFarlane/CalPERS program purchased its stake in the $9.6 million property from San Diego-based real estate investment trust Burnham Pacific Properties Inc., which had acquired the center last December. Burnham Pacific retains a 25 percent stake.
Margarita Plaza is located in a predominantly Hispanic area among the densely populated, primarily minority neighborhoods that the partnership targeted for investments when it was formed a year ago.
“We were impressed by the fact that most of the tenants had been in the center since it first opened,” said Johnson, adding that California Urban Investment Partners also has the option to purchase an adjacent 18,000-square-foot restaurant “pad” site owned by the City of Huntington Park.
Last June, CUIP agreed to purchase a 75 percent stake in the $20.1 million Ladera Center in Ladera Heights, a predominantly African-American community. NYSE-traded Burnham Pacific also retains the 25 percent balance of that center’s ownership.
Essex REIT buys apartments
On the multifamily front, an affiliate of Palo Alto-based real estate investment trust Essex Property Trust Inc. has purchased a garden-style apartment project at 18350 Hatteras St. in Tarzana for $10.35 million or $61,000 per unit.
The property was never officially listed for sale, but nevertheless drew competing offers due to burgeoning demand for large, high-quality apartment investments, said Capital Commercial Real Estate’s Melinda Russell, who brokered the sale.
The seller of the 1970s-vintage property, which features one-, two- and three-bedroom units, is a partnership affiliated with Ventures Unlimited.
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