Slowdown? What slowdown?

That might be the refrain for the Mid-Cities area, which saw its industrial vacancy rate fall two-tenths of a point to 2.3 percent in the four quarter, according to Grubb & Ellis Co.

Although new lease and sales transactions are slowing in the region that includes Downey, Norwalk and nearby cities, brokers said some tenants negotiated new or renegotiated shorter-term lease deals at lower asking rents which helped to prevent vacancy rates from rising.

"There is not a clear indication of how good or bad this latest correction is going to be, so people are making short-term decisions and staying put," said Jim McFadden, a senior vice president at Grubb & Ellis Co.

Saddle Creek Corp., a third-party logistics company, was an example of a tenant taking advantage of the slow market. The Dallas-based company subleased a 268,536-square-foot building at 12828 Carmenita Road in Santa Fe Springs. The two-year sublease at 43 cents per square foot was well below average asking rents.

Brokers said asking rents are likely to continue to fall because manufacturers and retailers, core tenants of the Mid-Cities' warehouses, are downsizing. "Pricing will drop anywhere from 20 to 30 percent," said Tim Cronin, a senior vice president at Lee & Associates.

However, brokers said sales transactions are likely to pick up in the coming months as potential buyers look to negotiate favorable deals with landlords that want to move space off the market.

Industrial Market At a Glance

Inventory: 107 million square feet

Under Construction: 67,360 square feet

Asking Rents: 55 cents


- KSDS Enterprises Inc. leased a 112,000-square-foot building at 15130 Northam St. in La Mirada from International Airport Centers Inc., a Highland Park, Ill. owner of industrial real estate. The five-year, four-month lease starts at 52 cents per square foot with annual increases of 3 percent.

- AK Coral Cay Trust signed a deal for a 53,000-square-foot building at 12979 Sandoval St. in Santa Fe Springs with landlord Lincoln Electric Co. The deal, an 11-year, four-month lease, was for a starting rate of 64 and a half cents per square foot.

- Hawaiian Express Service Inc. leased a 130,549-square-foot building at 16800 Trojan Way in La Mirada. The Hayward, Calif.-based distributor of food and household products signed a 72-month lease.

- Sealy Corp. closed a seven-year sale lease-back deal with a private investor for a 170,000-square-foot building at 4361 Firestone Blvd. in South Gate. The building sits on a 10.3-acre property.

- Shims Bargain Inc. renewed its lease for 267,500 square feet at 7026-7030 Slauson Ave. in Commerce. The L.A.-based importer-exporter signed the five-year lease at 45 cents per square foot worth $7.5 million with landlord AMB Property Corp.

- Saddle Creek Corp., a third-party logistics company based in Dallas, subleased a 268,536-square-foot building at 12828 Carmenita Road in Santa Fe Springs. The deal, a two-year sublease at 43 cents per square foot, was signed with manufacturer Klaussner Home Furnishings.

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