Though the fourth quarter is usually one of the slowest times for package movement at the ports, demand for industrial real estate in the South Bay remained high.
Industrial vacancy rates fell to 1.9 percent this quarter from 2.2 percent in the third quarter of 2006, and from 2.8 percent during the fourth quarter one year ago, according to Grubb & Ellis Co.
"About 40 percent of everything that comes through the port is consumed in Southern California. That's one reason people want warehouses here," said Don Smith, a senior vice president and principal at Lee & Associates South Bay office. "Everyone is getting plugged up. It is a problem, but it is a good problem to have."
As a result, the South Bay boasts some of the highest prices in Los Angeles for industrial space, behind only North L.A. In order to find space at cheaper prices, some tenants are looking in the Mid-Cities and Ontario.
Meanwhile, the South Bay continued to sustain rising levels of leasing activity through the fourth quarter in the office segment as tenants relocated or expanded their operations in the area from more expensive L.A. markets.
Office vacancy ended the year at 14.5 percent, down from 17.3 percent a year before. In some South Bay markets, like Torrance Central, vacancy dropped as low as 7 percent. Prices are rising as vacancy drops: Class A office space rose to $2.15 per square foot per month, up from $2.03 in the fourth quarter of 2005.
Kearny Real Estate Co. sold a total of 600,000 square feet of space in the Century Business Center in Hawthorne, formerly the Vought Aircraft Facility. The largest deal was the sale of a 534,000 square foot building to U.S. Storage for $24 million dollars.
DirecTV Group Inc. signed a five-year sublease with Newkirk Realty Trust Inc. for 205,000 square feet in an office complex at 2230 E. Imperial Highway in El Segundo. DirecTV will pay annual rent of $2.74 million with a yearly increase of 2 percent.
Jamison Properties Inc. bought an office building in Signal Hill Business Center in Long Beach for $30.8 million, or $200 per square foot. The 153,300-square-foot building, located at 2600 Redondo Ave., is situated on a 5.4-acre parcel.
Cornerstone Realty Fund Inc. purchased a 115,725-square-foot multi-tenant industrial property at 20100 Western Ave. in Torrance from Wesco Harbor Gateway LP for $19.7 million.
Soonest Express Co. Ltd., a Tawain-based international freight company, subleased the entire 107,525-square-foot facility at 1113 230th St. in Carson from Global Apparel, a monthly magazine focusing on the Asian apparel trade. The deal expires in March 2009 and is valued at about $1.6 million.
Oriental Motor U.S.A. Corp., a motor manufacturer, signed a 10-year lease to occupy the Pacific Gateway Center at 1001 W. Knox St. in Torrance. The facility is 51,731 square feet and sits on 3 acres.
First Industrial Acquisitions Inc. bought two industrial buildings totaling 107,333 square feet in Torrance at 433 Alaska Ave. and 2610-2660 Columbia St. from Art Hale Sr. for $10.5 million. Together, the buildings are on 4.8 acres.
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