The San Gabriel Valley has the economic slump to thank for turning its tight market into a much softer one last quarter.
Net absorption dipped into the red during the April-June period, as the market gave back 220,070 square feet of space, the worst performance since early 2007. Vacancy rates climbed nearly a half-point to 1.6 percent, but still managed to stay slightly lower than the county average of 1.8 percent, according to Grubb & Ellis Co.
"The San Gabriel Valley is driven by import-export and Asian companies, and port activity this year is down," said Steve Bellitti, senior vice president, Colliers International. "So that's had an effect on slowing the demand."
Rental rates also began to slip, but only dropped 3 cents to 57 cents the same rate as the third quarter of last year and 3 cents lower than the current county average of 60 cents. Bellitti said he doesn't expect any significant dip in the rental rates in the near future.
"It might take a little bit longer to get things leased and there may be some slight concessions, because in the past landlords made no concessions. But I don't really see any major impact over the next couple quarters," he added.
In an example of the concession trend, Northwestern Mutual leased 101,847 square feet of warehouse space in Pomona to Universal Shipping Inc. for 43 cents per square foot, triple net, for 61 months. The lease included one free month.
That deal helped make up the San Gabriel Valley's 1.07 million square feet of industrial sale-and-lease activity last quarter, down 700,000 square feet from the first quarter of the year.
Industrial Market At a Glance
Inventory: 173 million square feet
Under Construction: 423,000 square feet
Asking Rents: 57 cents
- KTR Capital Partners LP bought a 790,000-square-foot three-building portfolio from Alliance Commercial Partners LLC for $54 million. The buildings, which make up the Mission-71 Business Park, are nearly 100 percent occupied.
- Feit 1984 Trust purchased a 62,000-square-foot industrial building at 14323-14431 Proctor Ave. in City of Industry from Proctor Inc. for $6 million. The industrial property is made up of 62,600 square feet, 10 percent of which is office space.
- BW Enterprises Inc. acquired a 30,000-square-foot industrial building in City of Commerce for just over $3 million. The Anderson Family Trust sold the building, which was delivered vacant.
- 700 East Harrison LP purchased two Pomona properties from Harrison Street LLC for a total consideration of $7.6 million. The first property, at 2887 N. Towne Ave., is a 66,466-square-foot flex building, while the second property, at 700 E. Harrison Ave., is a 38,424-square-foot office building. Both properties are fully leased.
- Northwestern Mutual leased out a San Gabriel Valley industrial property to Universal Shipping Inc., which took 101,847 square feet of warehouse space at 2855 S. Reservoir St. in Pomona for 43 cents per square foot, triple net, for 61 months, including one free month.
- Santa Anita Properties LLC purchased a 12,000-square-foot building at 1918 Potrero Ave. in El Monte for $1.5 million, approximately $121 per square foot. APIP 225 LLC sold the property.
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