After ending 2008 in relatively good shape, the San Gabriel Valley’s industrial market stumbled last quarter while investors waited on the sidelines for prices to drop even further.
“We have investors out there and we have capital out there. The problem is the spread between sellers’ expectations and buyers’ expectations.” said Jim Center, senior vice president, Grubb & Ellis Co. “There’s still too wide a gap.”
Sale and lease activity actually increased more than 400,000 square feet to 1.05 million square feet during the January-March period, but net absorption plummeted to negative 2.28 million, according to Grubb & Ellis. That was in part because most of the activity was centered around smaller spaces, leaving the larger blocks of 100,000 square feet or more still available.
Some corporations took advantage of the recently lowered interest rates and Small Business Administration loan fees to buy property for their own use. Glass-fabrication firm PRL Glass Systems purchased 5.7 acres in City of Industry from the Industry Urban Development Agency for $4.5 million. The company, which already owns three other facilities in Industry, will break ground on a 90,000-square-foot industrial building later this year.
Vacancies shot up nearly two points to 4 percent, up from 2.2 percent in the fourth quarter of last year; asking rental rates fell two cents to 48 cents. The rental rates were as high as 60 cents during the first quarter of 2008.
A surplus of space for sublease has put downward pressure on direct lease rates and landlords are often willing to take less in exchange for peace of mind, according to Center.
Industrial Market At a Glance
Inventory: 179 million square feet
Under Construction: 1.2 million square feet
Asking Rents: 48 cents
MAIN EVENTS
– The Industry Urban Development Agency bought a 40,000-square-foot warehouse property at 111 N. Hudson Ave. in City of Industry from a private seller for $4 million. The agency plans to lease out the building, which was vacant at the time of sale.
– The development agency also bought a two-story Bank of America building for $6.2 million from a private trust. Bank of America will still occupy the 26,000-square-foot space at 150 N. Hacienda Blvd.
– Sanport Development Inc. sold a 54,000-square-foot industrial property at 1683 Mount Vernon Ave. in Pomona for $4.06 million to Superior Duct Fabrication Inc. The property, vacant at the time of sale, will be occupied by the new owner.
– Glass-fabrication firm PRL Glass Systems purchased 5.7 acres at 13644 Nelson Ave. in City of Industry for $4.5 million from the Industry Urban Development Agency in order to expand its operations. The company, which already owns three other facilities in Industry, will break ground on a 90,000-square-foot industrial building during the fourth quarter that is slated for completion at the end of 2010.
– Glass-fabrication and distribution firm Triview Glass Inc. leased a 48,288-square-foot industrial property at 711 S. Stimson Ave. in City of Industry for five years for a total consideration of more than $1.6 million. Newport Beach-based real estate investment firm Hager Pacific Properties is the landlord.
