The weak economy continues to take a toll on the vast South Bay and Mid-Cities industrial markets as companies in the area consolidate, sublease and renew rather than move.
Vacancies increased 1 point in the Mid-Cities region to 4.1 percent – the most dramatic increase of all Los Angeles County industrial markets – while the South Bay vacancy rate increased one-tenth of a point to 2.8 percent, according to Grubb & Ellis Co. It all reflected a slowdown at the ports that hit tenants hard, forcing landlords to offer deals on prime property.
John McMillan, a broker with Cushman & Wakefield, said one client, Philadelphia Gear Corp., opted to leave Lynwood because the company could upgrade its operations and snag cheaper rent (though he wouldn’t disclose the prior rent).
The King of Prussia, Pa., company, which designs and manufactures power transmissions, signed a 113,125-square-foot lease at 12935 Imperial Highway in Santa Fe Springs at 52 cents for 120 months.
“The company was expanding from an older, functionally obsolete building to a more modern environment,” McMillan said. “It was a good time to trade up, and they wanted to lock in today’s rate at a longer term.”
Asking rents dropped from 51 cents to 50 cents in Mid-Cities and from 62 cents to 57 cents in the South Bay.
Although some companies are looking to take advantage of the declining rates and free upgrades being offered by landlords, brokers said most want to renew leases to avoid unexpected moving costs.
Industrial Markets At a Glance
Inventory: 325 million square feet
Under Construction: 0 square feet
Asking Rents: 50 cents (Mid-Cities);
57 cents (South Bay)
Tatung Co. of America Inc., the U.S. branch of Taipei, Taiwan-based computer products manufacturer Tatung Co., signed a 293,800-square-foot lease at 2000 E. Carson St. in Carson. The deal with landlord Watson Land Co. is at 47 cents per square foot for 36 months.
Kranson Industries, a designer, developer and supplier of packaging containers for health and beauty products, food and beverages, and household and industrial chemicals, signed a 152,996-square-foot lease renewal at 13910 to 13950 Cerritos Drive in Cerritos. The St. Louis company renewed the lease for 62 months with landlord TIAA/CREF.
De Well Container Shipping Corp., a freight operator headquartered in Shanghai, acquired a recently constructed building at 2310 Gladwick St. in Rancho Dominguez for $8.4 million.
Total Warehousing Inc., a Phoenix-based pallet manufacturer and distributor, renewed a 165,510-square-foot lease at 8460 E. Whittier Blvd. in Pico Rivera for 47 cents per square foot. The deal with landlord Robertson Property Group is for 60 months.
VF Outdoor Inc., a subsidiary of contemporary apparel designer and manufacturer VF Corp., signed a 525,000-square-foot lease renewal at 15614 to 15700 Shoemaker Ave. in Santa Fe Springs. The deal with landlord Prudential is for 39 months. Terms of the deal were not disclosed.
Crown Crafts Infant Products, an infant products importer in Compton, signed a five-year lease extension for a 157,400-square-foot warehouse at 711 W. Walnut St. with Sares-Regis Group. The lease is valued at $4.5 million
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