The second quarter saw an explosion of industrial sales and leasing activity in the San Gabriel Valley that hit nearly 3 million square feet more than three times higher than the previous three months, according to Grubb & Ellis Co.


The area has long been headquarters for companies that ply the large import and export trade with China and other Pacific Rim countries, and with that trade booming so is the real estate market.


"If this trend continues, which it should, the need for space and the rent rates will increase, and the area is soon going to be out of products in a certain size range," said Jim Center, senior vice president of Grubb & Ellis.


The torrid sales and lease activity helped push down the 175-million-square-foot industrial vacancy rate to 1.2 percent, compared with 1.4 percent in the January-March period and 1.8 percent for the like period a year ago.


But with nearly 2 million square feet of new product under construction, asking rents were down 1 cent, to 47 cents, though Center said that did not reflect the latest lease signings.


The market was mostly driven by manufacturers but also expanding and seeking space were companies specializing in household products, furniture and footware, said Marc DiGennaro, senior vice president of Lee & Associates.


Clayton Industries, a designer, producer and distributor of steam generators, boilers and engine dynamometers, signed a 10-year lease for 62,730 square feet with EDW Properties for a stand-alone building in Industry.


Federal Express signed a three-year lease for a 77,000-square-foot building with the Carpenters Pensions Fund in an industrial park on Workman Mill Road in Industry.


And Best Formulations Inc., a contract manufacturer and private labeler of nutritional supplements, teas, powder drinks and drugs, signed a lease for 73,560 square feet on Radecki Court in Industry for just over seven years.


"More and more local companies, mainly distribution-oriented ones, are looking for space in the area," said Steve Bellitti, senior vice president at Colliers Seeley International.


In Whittier, Four Seasons General Merchandise Inc., an importer of various merchandise, signed a 614,000-square-foot lease at the Gateway Point Industrial Park.


On the sales front, 21 buildings were sold in the quarter, but totaling only 484,000 square feet, they were inadequate for big industrial users needing substantial space.


"It is a buyer's market more than a tenant's. But the properties on sale outstrip the demand and big players are being forced to sign leases or move towards the Inland Empire," Center said.


Some relief is on the horizon. Nearly 2 million square feet of industrial space was being constructed in the second quarter.


Also, the City of Industry's redevelopment agency has been acquiring land over the last two years that it plans to sell to developers. But it's not expected to add to the supply of industrial property for more than a year.


An while there were no lease deals reported out of the largest office park under construction Majestic Realty Co.'s Grand Crossing business park in east Industry with leasing strong over the past few quarters, the company expects star constructoin early next year on a 500,000-square-foot building and an 800,000-square-foot building


"We expect to break ground in the first quarter of next year," said Kent Valley, senior vice president at Majestic.


Also under development by Wohl Property Group were industrial condos ranging from 4,000 square feet to 8,000 square feet in east Industry. The property is structured similarly to residential condominiums.


Meanwhile, the office market, long the stepchild to the robust industrial market, saw vacancy rates rise half a point, to 10.8 percent.


Even without any product under construction, the office market gave back 69,000 square feet of space. Rents in the large Class B office market dropped to $1.88 from $1.93, while the Class A rents rose to $2.16 from $2.09.


Major Events:
& #8226; Clayton Industries, a designer,
producer and distributor of steam
generators, boilers and engine dynamometers, signed a 10-year lease for 62,730 square feet in Industry.
& #8226; Federal Express signed a three-year lease for a 77,000-square-foot building on Workman Mill Road in Industry.
& #8226; Best Formulations Inc., a contract manufacturer and private labeler of nutritional supplements, teas, powder drinks and drugs, signed a seven-year lease for 73,560 square feet on
Radecki Court in Industry.
& #8226; Majestic Realty Co. plans to move forward with two buildings totaling
1.3 million square feet at its Grand
Crossing business park in east
Industry.

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