In a further sign of the robust health of the South Bay's industrial market, Watson Land Co. simultaneously broke ground last week on five count 'em, five projects. Three are speculative and two are build-to-suits.
Making the event even more noteworthy is that until last week, Watson had not undertaken a single new project in a decade, and no industrial project had been undertaken in the South Bay in nine years, said Kirk Johnson, vice president of marketing and leasing for Watson.
Record levels of industrial space are being absorbed in the South Bay this year; users leased about 3.3 million square feet of space through the first nine months of this year, compared to 2.4 million square feet for the like period last year, according to CB Commercial Real Estate Group Inc.
And state-of-the-art industrial space is tough to find, with vacancy rates scraping 2 percent, down from about 5 percent last year.
"With no new product constructed in the past decade, there's a demand in the market for high-quality space," Johnson said.
Two of Watson's three speculative buildings are in Carson: a 191,700-square-foot structure on East Carson Street and a 109,475-square-foot building in the Watson Corporate Center. The third speculative project, a 51,475-square-foot building, is going up at Watson's Dominguez Technology Center in the city of Rancho Dominguez.
All three, worth a combined total of $10.5 million, are scheduled to be completed in spring 1998.
As for Watson's build-to-suits, one is being built for NEC Logistics America Inc., a computer monitor manufacturer. NEC signed a six-year lease agreement with Watson for a 123,364-square-foot facility Watson is constructing in the Dominguez Technology Center. NEC also signed a six-year lease renewal for its existing 102,519-square-foot distribution facility that is adjacent to the new development. The combined lease renewal and project construction are worth $5.2 million.
Watson's other build-to-suit project is a 100,000-square-foot vehicle preparation facility for Mercedes Benz of North America.
The facility, where cars will be spruced up before being sent to dealerships, is being built on the 15-acre site, along with a separate car storage facility and an on-site test track. Mercedes Benz signed a 10-year lease worth $10 million for the site in Watson Industrial Center South, a 350-acre business park. Mercedes Benz plans to consolidate its West Coast operations there, vacating the 262,000-square-foot facility it presently occupies in Watson's business park, Johnson said.
Watson owns about 9.8 million square feet of existing industrial space, of which 8.5 million square feet are in the South Bay. Johnson said the company still has about 200 acres left to develop at its three industrial parks in Carson and Rancho Dominguez. "We're very bullish on the South Bay's economy," he said.
Other industrial activity
In the northeast San Fernando Valley, a partnership between South Gate -based World Oil Co. and Sun Valley-based Adom Ratner-Stauber has just bought a nine-acre parcel of land. The partnership intends to build three speculative structures on a 170,000-square-foot campus, called the
Valley Gateway Business Park.
The partnership plans to break ground early next year, according to Chris Sullivan of Daum Commercial Real Estate Services, who represented the partnership.
In other industrial market news, the largest transaction in the city of Vernon so far this year has closed. It involved Fortune Fashions, a clothing manufacturer and distributor, buying a 424,000-square-foot industrial facility and one acre of land from grocery warehouse chain Smart & Final Inc. in a deal worth $9.1 million.
Smart & Final has leased back the building for one year while it moves its warehousing facilities to a 22-acre site in the City of Commerce, which it purchased from Certified Grocers of California.
Once that one-year lease is up, Fortune will move into the building from the 170,000-square-foot space it currently occupies in the City of Commerce, according to Timur Tecimer, a senior vice president at Trammell Crow Co. who represented Fortune.
L.A. Cellular announced it is relocating its headquarters within Cerritos, moving about 200 yards from its existing 150,000-square-foot building in the Cerritos Towne Center to a new 250,000-square-foot structure to be built in the same office park.
The wireless service provider plans to consolidate its operations at the new building; currently, the company is subleasing space in Cerritos and operating its telemarketing division in Cypress, according to Rich Grimes, director of real estate and construction for L.A. Cellular.
L.A. Cellular, a joint venture of AT & T; Wireless and BellSouth Cellular Corp., is financing the $45 million development. But Grimes said the company is considering ultimately selling the building and leasing it back as a tenant "if we have the opportunity to take advantage of capital markets and the real estate cycle," Grimes said.
L.A.-based CommonWealth Partners is developing the project on a for-fee basis. It is being designed by the architectural firm Hellmuth Obata & Kassabaum Inc.
Culver City acquisition
Lincoln Property Co. purchased the 325,000-square-foot La Cienega Slauson Business Park in Culver City for about $28 million. The office-retail center was about 65 percent leased at the time of purchase, according to Steve Solomon of the Seeley Co., who represented the buyer.
Solomon sold the same property in May 1996 to Koll Realty Advisers for about $17 million and at the time, it was one of the biggest commercial deals to close in the county for the year. Koll renovated the property, and its new owners intend to begin "an aggressive marketing campaign" to lease up the balance of the property at monthly rates in the $1.50-to-$1.75-per-square-foot range, Solomon said.
Lincoln Property a Foster City, Calif.-based development and property management firm adds the Culver City business park to the Collins Properties building it purchased this September in Marina del Rey. It's known as the Collins Properties building because Collins Properties Inc. is the building's main tenant.
Joyzelle Davis covers real estate for the Los Angeles Business Journal.
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