SAN GABRIEL VALLEY: Warehouses Sit Empty as Port Business Slows

0

The San Gabriel Valley watched its industrial real estate market take another hit last quarter as import activity at the ports continued to dip.

The effects are clear: Sale and lease activity during the July-September period was off by 75 percent from the same quarter a year ago, according to figures from Grubb & Ellis Co.

“The ports of L.A. and Long Beach have always grown by 8, 10, 12 percent every year for the last eight to 10 years. That’s significant because we keep building these warehouses to house the boxes that come off these ships. When that activity goes down, that’s a problem,” said Tim O’Rourke, executive vice president, Jones Lang LaSalle.

Luckily for the area, its lack of available land means it hasn’t experienced a frenzy of new construction as other markets, like the Inland Empire, have over the past several years.

Still, tenants are moving out faster than they’re moving into existing space as evidenced by last quarter’s net absorption rate, which landed at negative 1.15 million square feet. Not surprisingly, the tenants that seem to be putting their space on the sublease market most frequently are construction-supply and housing-related companies, said O’Rourke.

The San Gabriel Valley’s vacancy rate climbed nearly 1 point to 2.5 percent last quarter, its highest rate in five years. Asking rents dropped 2 cents to $0.55 last quarter, but remained slightly above rates from the third quarter of 2007.

While some companies have moved east from the San Gabriel Valley to take advantage of even lower rents in the Inland Empire, others are staying put or coming back because of high fuel prices.

“City of Industry has an advantage because it’s more central, especially if you’re port dependent,” said O’Rourke. “As fuel costs become higher, people want to be more central in the market, not only for outbound distribution but also inbound from the port.”


MAIN EVENTS

– Dallas-based AIC Ventures acquired 1811 E. Railroad St. in City of Industry from aluminum extrusion company Indalex for a little more than $15 million, or about $83 per square foot. Indalex will lease the 181,129-square-foot building back.

– A group of investors led by Thang Q. and Kathy T. Pham has sold an industrial property at 1100-1102 John Reed Court for $11.6 million. The new owner, Chi-Ming Fan, plans to occupy Unit 1100, while PC Poultry has leased Unit 1102.

– The Industry Urban-Development Agency bought a City of Industry warehouse at 17651 E. Railroad St. Pasta products manufacturer Gabriele Macaroni Co. Inc. sold the 19,500-square-foot property for $4.1 million, or about $210 per square foot. The facility, built in 1974, includes two loading docks and one drive-in bay, and was unoccupied at the time of purchase.

– Progressive Produce Corp. purchased a 27,079-square-foot industrial building at 6239 Bandini Blvd. in the City of Commerce for $4.17 million. An investment group led by David and Febe Campos sold the 1.1-acre property.

– Supply Chain management and logistics firm Topocean Consolidation Services leased two warehouses totaling 132,000 square feet in the City of Industry. The company now occupies three buildings totaling 232,000 square feet at Majestic Realty’s Crossroads Industrial Park. Financial terms were not disclosed

– Automatic Data Processing Inc., a subsidiary of ADP Tax Services Inc., inked two long-term lease renewals in San Dimas totaling 200,000 square feet. The first renewal involved the 50,000-square-foot Building 3 at 620 W. Covina Blvd. The second lease was for 150,000-square-foot Building 11 at 400 W. Covina Blvd. Terms of the deal were not disclosed. ADP has occupied both spaces, owned by Majestic, since 1988.



Industrial Market At a Glance

Inventory: 172 million square feet

Under Construction: 550,000 square feet

Asking Rents: 55 cents

No posts to display