Rates Continue to Lure Buyers, Making Rental Property Scarce
By ANDY FIXMER
Dominated by sales activity, the Mid-Cities region posted nearly 1.5 million square feet of sales and leasing activity in the October-December quarter, besting the 1.2 million square feet recorded in the previous period. Overall sales and leasing in the year-earlier quarter was 1.8 million square feet, according to Grubb & Ellis Co.
With owner/operators dominating the investment market, space in the rental market in the swath of industrial towns sandwiched between the Long Beach (710) and San Gabriel River (605) freeways has become increasingly scarce. That helped drop fourth quarter vacancies to 4.3 percent from 4.5 percent in the third quarter and 4.8 percent in the year earlier period. Still, the Mid-Cities industrial vacancy rate is above the 3.2 percent rate for countywide industrial properties.
By far the largest deal of the quarter was struck by Argus Realty Investors, which purchased the leasehold interest in the 23-building Heritage Corporate Center in Santa Fe Springs from Kearney Real Estate Co. for $52.6 million. The City of Santa Fe Springs owns the 65-acre property beneath the 720,300-square-foot center.
In Cerritos, Savv Corp. bought a 35,000-square-foot warehouse at 13336 Alondra Blvd. from James Khodayar for $2.9 million, according to Jim McFadden, a Grubb & Ellis senior vice president, who represented the seller.
And R & H; Investments LLC bought a new 84,651-square-foot building at 11020 Bloomfield Ave. in Santa Fe Springs from developer Sares Regis LLC for $6.3 million.
On the retail side, a group of Los Angeles investors called Norwalk LLC bought the 235,000-square-foot retail center Norwalk Town Square at the northwest corner of Rosecrans Avenue and Pioneer Boulevard for $29.5 million.
The deal was the largest retail transaction since Hopkins Real Estate Group and Lennar Partners paid $50 million for the 880,000-square foot Whittwood Mall in Whittier in August 2002. The site is being redeveloped as a mixed-use open-air entertainment center.
Transwestern Investment Co., along with partner Starwood Real Estate, sold a 464,000-square-foot building on Imperial Highway to Sonnenblick-Del Rio Development Inc. for $48 million. Major tenants include L.A. County offices and the local branch of the Federal Bureau of Investigation.
"(Mid-Cities) just keeps chugging along," said McFadden, who specializes in Mid-Cities industrial properties. "There's a strong buying market but it's very anemic when it comes to leasing."
Still, a smattering of leases were signed in the fourth quarter, and some commercial and industrial brokers said they have large deals that have been pending for several months but which could be completed early in the first quarter 2004.
"There just weren't any deals in a rush to get done, and the deals that got done took six months to do," said Mike Roski, an industrial broker with Majestic Realty Co. "They just lingered for what felt like forever."
The largest lease deal was signed by American Relocation & Logistics, which took 120,900 square feet at 13565 Larwin Circle in Santa Fe Springs for its corporate headquarters. The five-year lease at 41 cents per foot is valued at $247,845.
New space continues to be added to the market, though at a slower pace than in previous quarters. About 900,000 square feet was under construction in the fourth quarter, compared to 1.3 million square feet in the third, according to Grubb & Ellis.
In Commerce, the 10-building, 482,000-square-foot Citadel Business Center is scheduled to open for business early this year. At the Montebello Metro Center, construction has commenced on two 700,000-square-foot buildings.
Construction has also begun on the Painter Business Park in Santa Fe Springs, a campus of 16 buildings ranging from 7,400 to 23,369 square feet. The buildings should be complete by mid-year, and already 11 are in escrow, according to Cushman & Wakefield Inc.
-Argus Realty Investors purchased the leasehold interest in the 23-building Heritage Corporate Center in Santa Fe Springs from Kearney Real Estate Co. for $52.6 million.
-R & H; Investments LLC bought a new 84,651-square-foot building at 11020 Bloomfield Ave. in Santa Fe Springs from developer Sares-Regis Group for $6.3 million.
-American Relocation & Logistics leased 120,900 square feet at 13565 Larwin Circle in Santa Fe Springs. The five-year lease at 41 cents a foot is worth $247,845.
-Specialty Dispatch leased 90,000 square feet of warehouse space for 38 cents a foot at 16330 Phoebe Ave. in La Mirada from Majestic Realty Co. The five-year lease is worth $171,000.
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