-Performance Team Concepts leased 300,000 square feet of warehouse/distribution space at 12908 Shoemaker ave. in Santa Fe Springs.
-Nabisco signed a lease for 100,000 square feet at 6225 Knott St. in Buena Park.
-An 81,000 square foot building at 11823 Slauson Avenue in Santa Fe Springs was sold to Commerce Center Santa Fe Springs for just under $5 million.
-The County of Los Angeles signed a $12 million 10-year lease for nearly 70,000 square feet at 12440 E. Imperial Center in Norwalk.
All things considered, the Mid-Cities area had a stable third quarter, but real estate professionals fear a rough end of the year as companies put decisions on hold until they get a better sense of where the economy is headed.
The industrial vacancy rate stayed at 7.6 percent last quarter and the asking rent rose a penny to 51 cents per square foot.
"Deals are happening but people are sensitive," said Jim McFadden, a senior vice president at Grubb & Ellis Co. "I think it would be hard for a company director to make a long-term commitment when the market is going in the other direction."
McFadden said most everyone is searching for a bargain and that clients are either renting space in older buildings or holding out until prospects get better.
"Everybody's really trying to lower their overhead right now," he said. "It seems like the deals that are taking place are happening in B buildings with lower rates."
Though new deal flow is expected to slow, many tenants have opted to stay in place rather than rock the boat.
"A lot of people are trying to renew their leases instead of taking on the cost and disruption of relocating," said McFadden.
McFadden said based on the number of transactions thus far, he expects to see a slow fourth quarter and that more than likely the vacancy rate will rise. And the leases that are signed will be shorter term agreements. "I think you're going to see more three-year leases as opposed to five-year," he said.
Significant leases in the third quarter included a 300,000-square-foot warehouse/distribution center that was leased by Performance Team Concepts at 12908 Shoemaker Avenue in Santa Fe Springs. Nabisco also signed on for a 100,000-square-foot building at 6225 Knott in Buena Park.
In Santa Fe Springs, an 81,000 square foot building at 11823 Slauson Avenue was sold to Commerce Center Santa Fe Springs for just under $5 million.
Almost 2.1 million square feet were leased and sold in the third quarter. That's more than the 1.3 million square feet in the second quarter and the 1.8 million square feet that came off the market in the third quarter of 2000.
In the Santa Fe Springs area there was new product added to the market. A 225,000 square foot warehouse/distribution center was completed at the Golden Springs Business Center in April. Also, just under 200,000 square feet are scheduled to be completed at the Mission Business Center at the end of 2001.
At present over two million square feet of space are under construction in the Mid-Cities area. And that may not be good news.
McFadden sees a softening of the market since the events of Sept. 11. "People are trying to stay away from long-term commitments," he said. "If I were a landlord I'd try and make every deal I could, within reason, in the short-term, even if I had to make a few concessions."
He said that many prospective tenants believe prices will be coming down and that could be a self-fulfilling prophecy.
"When you have an environment where people believe rates are gong to fall, the mentality becomes 'if I can wait I can get a better deal,'" said McFadden. "That attitude is playing into the market right now."
Although most activity in the Mid-Cities market has been in the industrial space, there was at least one significant leasing in the office category.
In September, the County of Los Angeles signed a $12 million 10-year lease for nearly 70,000 square feet at 12440 E. Imperial Center in Norwalk. The space will be used for training facilities and administrative offices for both the Department of Health Services and the Department of Social Services.
Lonnie Riddle, a senior vice president at Grubb & Ellis, said that the Mid-Cities office market is "holding its own right now."
"I don't see a lot of absorption but I don't see any major tenants leaving," he said.
Riddle said the average size deal in the Mid-Cities office market has been in the range of 2,000 to 3,000 square feet.
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