Major Events:

- National Retail Services leased 116,000 square feet of industrial space at 355 W. Carob St. in Compton.

- International Rectifier expanded by signing a nearly 10-year lease for 53,000 square feet of space at $2.77 a square foot at 101 N. Sepulveda Blvd. in El Segundo.

- Honeywell signed a lease to rent 60,000 square feet of office space at 2545 W. 190th St. in Torrance.

Vacancies in the South Bay area, which has been hit hard by the economic downturn in the past year, climbed for the third quarter in a row as companies either closed their doors or consolidated into smaller office spaces.

The total vacancy rate for commercial office space grew to 16.2 percent in the third quarter, up from 14.2 percent in the second quarter of 2001 and 12.6 percent during the first quarter, according to Grubb & Ellis Co.

Of all the L.A. County real estate markets monitored, the South Bay area had the highest negative net absorption rate during the third quarter, totaling 649,809 square feet. There was about 400,000 square feet of office space under construction.

On the industrial front, the vacancy rate inched up slightly to 4.6 percent in the third quarter, compared with 4.5 percent in the second quarter.

"I think it is a general across-the-board retrenchment of business as a result of the downturn in the economy," said Jim Biondi, senior vice president at Grubb & Ellis Co.

The area was hit hard by the dot-com collapse. Several Internet companies that expanded rapidly snapped up major office space in Manhattan Beach and El Segundo. The South Bay was the second choice for many Web entrepreneurs who couldn't get into the Santa Monica and West Los Angeles markets.

Now all this office space sits on the market in the form of sublease space. Real estate professionals say it could take 12 months to 15 months for the market to absorb this space.

"The bulk of the vacancies and sublease space is located in El Segundo," said Stephen Cramer, senior vice president of Colliers Seeley International.

The resulting defense buildup from the Sept. 11 attacks could, however, be a boost for the area. Defense-related businesses are renewing their leases and looking for extra space.

TRW Space & Defense Group recently signed leases to rent two offices near the company's main campus in Redondo Beach known as Space Park. TRW also recently renewed its lease for 155,000 square feet of space at Manhattan Towers located at 1230 and 1240 Rosecrans Ave.

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