Tenants taking advantage of low asking rents to lock down long-term leases at bargain-basement prices drove the quarter’s activity in the South Bay and Mid-Cities industrial markets.
The recent activity is a sign, brokers said, that as businesses are stabilizing, they’re less fearful of committing to longer leases.
“Last year we were doing a lot of one-year and two-year leases,” said Jim Biondi, senior vice president at Grubb & Ellis Co. “We’re still doing those, but we’re seeing more long-term leases, which is a good sign.”
But despite indications of an upswing, many recent deals have resulted from tenants looking to consolidate multiple leases. As such, vacancy rates showed little change since the first quarter.
Vacancies rose one-tenth of a point to 2.8 percent in the South Bay, while vacancies in the Mid-Cities region, which has the county’s highest industrial vacancy rate, were down one-tenth of a point to 5 percent, according to Grubb & Ellis Co.
The South Bay, usually the stronger of the two markets due to its proximity to the port, saw asking rent stay at 52 cents; Mid-Cities saw a 4-cent drop from last quarter to 43 cents.
Patrick Schlehuber, director of acquisitions for Rexford Industrial, said South Bay tenants have been more active, but pointed to some landlords’ unwillingness to lease at such low asking rents as a factors driving up vacancies.
“It depends on how badly a landlord wants to move a particular building,” Schlehuber said. “There’s still reluctance on the landlord side to do a long-term deal at such a low rate.”
Industrial Market At a Glance
Inventory: 331 million square feet
Under Construction: 0
Asking Rents: 43 cents (Mid-Cities); 52 cents (South Bay)
- DataLok leased an 87,000-square-foot warehouse at 910 E. Sandhill Ave. in Carson. The storage company is locked into a 10-year lease with the owner, a family trust. The deal marks a consolidation for DataLok, which will vacate two facilities in Carson and one in Hawthorne.
- Animal feed supplier ACX Pacific Northwest signed a five-year lease for a 148,000-square-foot warehouse at 920 E. Pacific Coast Highway in Wilmington. The property is located on a large lot with land that can be used for truck parking or additional storage. A private family trust owns the property.
- Access Business Group LLC, an Ada, Mich.-based lighting manufacturer, signed a seven-year lease at 12825 Leffingwell Ave. in Santa Fe Springs. The lease for the 155,000-square-foot building in the Golden Springs Business Center topped $7 million in value.
- Bike manufacturer Huffy Bicycles signed a four-year lease for a warehouse at 21750 Arnold Center Road in Carson. The asking rate for the 189,000-square-foot property was 51 cents per square foot per month. The U.S. Postal Service previously occupied the building.
- Global logistics company CEVA leased a 284,000-square-foot building in Carson from the Watson Land Co., replacing previous tenant Hitachi Transport Systems Ltd. The five-year lease at 18120 Bishop Ave. starts at an asking rate of 57 cents per square foot per month.
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