SAN GABRIEL VALLEY: Port Slowdown Spurred Wave of Vacancies

LIZBETH SCORDO
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Major events in individual commercial and industrial real estate markets across the area in the fourth quarter.

Landlords in the San Gabriel Valley’s import-dependent industrial market were more than happy to bid farewell to 2009, a year that dealt them a serious slowdown at the ports and a vacancy rate that nearly doubled.

Though the market began 2009 with vacancies at 2.2 percent, that rate quickly ballooned and ended the year at 4.3 percent, according to Grubb & Ellis Co. And even those numbers don’t necessarily tell the whole story.

“That vacancy rate is somewhat misleading because there are other buildings on the market that are occupied by tenants trying to sublease,” said Jim Center, a senior vice president with Grubb & Ellis.

The asking rent fell a penny to 43 cents per square foot last quarter, seven cents lower than the year-ago period. These days, however, asking rents are just that. Center pointed to Los Angeles County’s largest industrial lease of the year (and one of only a handful signed in the San Gabriel Valley during the fourth quarter): Unical Aviation’s long-term, $20.6 million lease of 467,119 square feet in City of Industry, a space previously occupied by now-defunct retailer Circuit City. The landlords had been asking for 38 cents per square foot, but the contract was signed for 28 cents.

“There’s a substantial discount from ask to take,” added Center.

But the year ended with some promising news: In December, the ports logged the first uptick in monthly container cargo numbers in more than two years, a good sign for area businesses. And on the sale side, Center said brokers are seeing a pickup in interest thanks to users seizing on lowered prices.

Industrial Market At a Glance

Inventory: 179 million square feet

Under Construction: 0

Asking Rent: 43 cents

MAIN EVENTS

  • Vinh Sanh Trading Corp. purchased a 179,568-square-foot warehouse-distribution property at 13500 Nelson Ave. in City of Industry from Sunrider for $10.8 million, or about $60 per square foot.

  • Fast-food chain In-N-Out Burgers purchased a 12,000-square-foot industrial property at 949 N. Cataract Ave. in San Dimas for $1.25 million from General Electric Credit Equities.

  • The Los Angeles Community College District bought Monterey Park’s Crown Plaza, a five-story office building at 1055 Corporate Center Drive, from Union China Investment and Development Group Inc. for $13.37 million. The district will use the property as part of a campus expansion for East Los Angeles College.

  • Gov. Arnold Schwarzenegger signed a bill that expedited a National Football League stadium proposal in City of Industry by effectively nullifying an environmental lawsuit filed by citizens of neighboring Walnut. That will allow developer Majestic Realty Co. to move forward with the $800 million project, provided it can entice a team to move to Los Angeles.

  • Unical Aviation signed a $20.6 million long-term lease with landlords Cardinal Capital Partners and Benenson Capital Partners for 467,119 square feet at 680 South Lemon Drive in City of Industry. Unical will move its headquarters and warehouse from Irwindale to the Industry property, which was previously occupied by now-defunct retailer Circuit City. The deal was the biggest industrial lease in Los Angeles and Orange counties in 2009, according to Colliers International, which brokered the transaction.

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