While higher fuel costs have been a drag on international trade and the economy, it would be hard to know that looking at the South Bay's industrial real estate market.

The region, heavily dependent on port-related traffic, was the only industrial market in L.A. County to see its vacancy rate fall during the quarter though it was just one-tenth of a point to 2.4 percent. How so?

Fuel costs may raise the cost of shipping freight from Asia, but it's an even bigger burden for local freight forwarders, which now want to be close to the San Pedro Bay port complex.

"It's more cost-effective to pay more rent and stay by the port than it is to save rent and pay more for trucking and transportation costs," said Howard Schwimmer, managing partner of Rexford Industrial, a Los Angeles industrial real estate firm.

Indeed, brokers said land values have continued to increase as companies are tearing down buildings and repositioning the land for use as container storage.

"It defies logic in some instances when you look at what people pay for property and see them tear a building down," Schwimmer said. "But we are seeing more and more of it."

Chicago-based real estate investment trust First Industrial Realty Trust Inc. razed about 150,000 square feet of space at 3015 Ana St. last year. Then in May, DHL/Exel Inc., a unit of express delivery and logistics company Deutsche Post AG of Germany, leased the site for $12.9 million, including a remaining warehouse and five acres for truck parking.

However, brokers said the wealth was not being spread all around, as companies focus on smaller buildings, below 50,000 square feet, which are more affordable than larger warehouses.

"There continues to be softness in larger size buildings, 100,000 square feet and above," said Gary Blau, sales executive at the Goodglick Co. "But I think owner-user buildings for sale under 50,000 square feet can find buyers if they are well priced."


- Long Beach-based Bixby Village Golf LLC purchased a 51,000-square-foot warehouse building at 1306 Alameda St. in Compton. The building was sold by private seller Michael Dancyger for $133.50 per foot.

- Roland Products, a distributor of European cookware, bedding and appliances, bought a 40,000-square-foot warehouse at 1700-1702 El Segundo Blvd. in Gardena. The building was sold by private seller David Eyi for $137 per foot.

- Jamison Properties Inc. purchased a 163,358-square-foot office building at 5000 Sprint St. in Long Beach. The building was sold by Los Angeles-based Arden Realty Inc. for $34 million.

- Boston-based real estate investment firm TA Associates Realty purchased a 103,252-square-foot office building at 2401 El Segundo Blvd. in El Segundo. The building was sold by Los Angeles-based Investment Development Services Inc. for $24.5 million.

- MediaNews Group Inc., the Denver-based owner of the Los Angeles Daily News, leased a 26,186-square-foot office building at 21250 Hawthorne Blvd. in Torrance for 10 and a half years starting at $2.05 per square foot.

- Satellite television provider DirecTV Group Inc. expanded its lease at 2240 Imperial Highway in El Segundo. The 24,445-square-foot lease is for 71 months starting at $2.25 per square foot.

Industrial Market At a Glance

Inventory: 220 million square feet

Under Construction: 1.17 million square feet

Asking Rents: 67 cents

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