Despite signs that port traffic and the region's economy may be slowing, the Mid- Cities industrial market tightened up in the third quarter.


Vacancy rates in the region that includes Pico Rivera, Cerritos, Whittier and Santa Fe Springs fell nearly one point since the second quarter to 1.6 percent. At the same time, asking rents slid one penny to 56 cents, which is still higher than rents in central Los Angeles and the San Gabriel Valley, according to Grubb & Ellis Co.


Most of the tenants are warehouse and distribution companies, furniture companies, cold storage companies and importers from China that do business at the ports.


"The market is holding steady," said Peter Bacci, a senior vice president at Lee & Associates. "Sale and lease rates continue to remain strong, mostly because of institutional ownerships that continue to come into the area and pay higher prices and lower cap rates for larger portfolios."


The largest institutional deal of the year came in the second quarter, when Chicago-based Walton Street Capital bought the Cerritos Distribution Center, the Downey Distribution Center, and the Carmenita Business Park. The business parks were part of the 95-property, 23 million-square-foot CalWest Industrial Holdings portfolio bought from the California Public Employees Retirement System for $2.8 billion.


However, the Mid-Cities market predominantly serves as a location for entrepreneurial owners who live along the coastal region and buy smaller industrial spaces, said Rooney Dashbach of Cushman and Wakefield. Most companies often stay for a long period of time.


For example, the Coaster Co. of America, a furniture distributor, renewed its lease for the entire 284,580 square feet available at an industrial building at 12434 Lakeland Road in Santa Fe Springs. The Class A building has served as one of the firm's Southern California distribution centers since it was built in 1998.


MAIN EVENTS

Despite signs that port traffic and the region's economy may be slowing, the Mid- Cities industrial market tightened up in the third quarter.


Vacancy rates in the region that includes Pico Rivera, Cerritos, Whittier and Santa Fe Springs fell nearly one point since the second quarter to 1.6 percent. At the same time, asking rents slid one penny to 56 cents, which is still higher than rents in central Los Angeles and the San Gabriel Valley, according to Grubb & Ellis Co.


Most of the tenants are warehouse and distribution companies, furniture companies, cold storage companies and importers from China that do business at the ports.


"The market is holding steady," said Peter Bacci, a senior vice president at Lee & Associates. "Sale and lease rates continue to remain strong, mostly because of institutional ownerships that continue to come into the area and pay higher prices and lower cap rates for larger portfolios."


The largest institutional deal of the year came in the second quarter, when Chicago-based Walton Street Capital bought the Cerritos Distribution Center, the Downey Distribution Center, and the Carmenita Business Park. The business parks were part of the 95-property, 23 million-square-foot CalWest Industrial Holdings portfolio bought from the California Public Employees Retirement System for $2.8 billion.


However, the Mid-Cities market predominantly serves as a location for entrepreneurial owners who live along the coastal region and buy smaller industrial spaces, said Rooney Dashbach of Cushman and Wakefield. Most companies often stay for a long period of time.


For example, the Coaster Co. of America, a furniture distributor, renewed its lease for the entire 284,580 square feet available at an industrial building at 12434 Lakeland Road in Santa Fe Springs. The Class A building has served as one of the firm's Southern California distribution centers since it was built in 1998.


Sarah Filus

Sarah Filus

For reprint and licensing requests for this article, CLICK HERE.