Major Events:
-K-Mart Corp. signed a 10-year lease for a 760,000-square-foot warehouse and distribution facility at 3100 Milliken Ave. in Mira Loma.
-Exel, a logistics company, signed a seven-year, $22.4 million lease for 830,000 square feet of built-to-suit space off Napa Street in Fontana.
-Crossflow Logistics, the transportation arm of Procter & Gamble Co., signed a 10-year, $19.2 million agreement to lease 458,300 square feet of warehouse space at 14701 Yorba Ave. in Chino.
-Best Buy Co. leased 349,700 square feet of distribution space at 14315 Pipeline Ave. in Chino.
The economic slowdown is benefiting the Inland Empire as users of industrial space scurry out of Los Angeles County and other more pricey areas nationwide.
The region maintained its reputation as one of the nation’s most sought-after areas for industrial space with 6.8 million square feet of new construction coming on the market last quarter, an increase from 4.3 million in the second quarter, according to Grubb & Ellis Co.
The vacancy rate fell during the third quarter, to 6.8 percent from 7.3 percent in the previous three months, reflecting a jump in leasing and sales activity to 6.8 million square feet from 4.9 million.
Since the beginning of the year, 14.9 million square feet of speculative space has been available with another 6.8 million square feet currently under construction.
“Keep in mind that the year 2000 was probably the best year for industrial activity ever in the Inland Empire. All things considered, this has been a good year and we’re not done yet,” said Mark Kegans, senior vice president of the industrial sector for Grubb & Ellis.
Much of the attraction stems from the comparatively low leasing rates of 30 to 38 cents per square foot, which is far below the 47 to 59 cents L.A. County landlords are charging.
Among the larger deals in the third quarter:
K-Mart Corp. leased a 760,000-square-foot warehouse and distribution facility at 3100 Milliken Ave. in Mira Loma for an undisclosed sum from J.W. Mitchell Investment Co. Toys-R-Us.com signed a 10-year, $32 million lease on the building in May 2000 and added $30 million of equipment and tenant improvements to the facility. When the dot-com industry went bust, the company negotiated a release from its agreement, allowing Lee & Associates to secure the current tenant.
Exel, a logistics company, signed a seven-year, $22.4 million lease for 830,000 square feet of built-to-suit space owned by Catellus Corp. off Napa Street at the Kaiser Commerce Center in Fontana.
Crossflow Logistics, the transportation arm of Procter & Gamble Co., signed a 10-year, $19.2 million agreement to lease 458,300 square feet of warehouse space at 14701 Yorba Ave. in Chino from Trammell Crow Co. Colliers Seeley represented the tenant, which filled the last vacancy in the 890,000-square-foot, five building Centrepointe South complex.
Best Buy Co. leased 349,700 square feet of space from Majestic Realty Co. at 14315 Pipeline Ave. in Chino. Colliers Seeley International Inc. secured the seven-year, $9.9 million deal for the retail chain.
Sport Chalet Inc., represented by Insignia/ESG, signed a 10-year, $11.5 million deal to lease 326,000 square feet from Investment Development Services Inc. in a building at 2285 Ponderosa Ave. in Ontario.
USCO Distribution Services Inc. agreed to pay BIT Holdings Forty-Three Inc. $5.4 million over five years for 302,000 square feet of space in the Etiwanda Distribution Center at 1000 Etiwanda Ave. in Ontario.
“Right now, a lot of corporate America is consolidating their distribution networks,” said Scott Evans, director of industrial leasing for Colliers Seeley. “We have the most available space in Southern California, as well as most of the newest state-of-the-art products at the least expensive rates.”
The office sector plays a less significant role in the Inland Empire’s economy, with a total of only 14.3 million square feet.
Office vacancies increased to 14 percent in the third quarter, up from 12.7 percent in the previous quarter.
In one of the few significant office deals during the third quarter, CB Richard Ellis brokered a 5-year lease for $2.1 million on behalf of Allegiance Health Care Corp. for 19,500 square feet of space in Empire Towers 3 at 4200 Concourse Drive in Ontario.
The Sept. 11 terrorist attacks on the East Coast only gave a minor jolt to the area, brokers said.
“The phones stopped ringing for a week (after Sept. 11),” Kegans said. “Then it just resumed.”
