The continuing downsizing of South Bay aerospace operations hurt the office market during the first quarter even as demand grew steadily for industrial space.
The latest companies pulling back are Northrop Grumman Corp., which plans to move its Century City corporate headquarters to the suburban Washington, D.C., area this year, and Boeing Co., which will still have major local operations.
Northrop vacated 215,000 square feet at 1230 Rosecrans Ave. in Manhattan Beach, where it had offices for its satellite and International Space Station operations. Boeing left 126,000 square feet at 4811 Airport Plaza Drive in Long Beach, where it had offices for its B-1 bomber and C-130 Hercules cargo plane.
The withdrawals left the South Bay with a negative absorption of 387,358 square feet and a vacancy rate that rose three-tenths of a point to 19.3 percent, according to Grubb & Ellis Co.
Steve Solomon, managing director at Jones Lang LaSalle in El Segundo, said there were few lease deals for South Bay offices during the quarter but a number of buildings were sold.
“The sales market has come back along with the financial markets,” he said. “If the building is leased, it can sell.”
Meanwhile, in the Mid-Cities area, a swath of older industrial neighborhoods from Pico Rivera to Cerritos, sales and lease activity hit 1.8 million square feet, almost 300,000 square feet more than a year earlier. That pushed down the industrial vacancy rate eight-tenths of a point to 3.6 percent. Lease rates are up 2 cents to 43 cents since the fourth quarter. Still, brokers are looking for better.
“The market is improving, but that hasn’t translated yet into a rapid increase in lease rates or sale prices,” said Steve Calhoun, a broker at Colliers International in Commerce.
- PC Mall, an online computer retailer, purchased 1940 E. Mariposa Ave. in El Segundo for $9.5 million. The 82,000-square-foot office building will become the company’s headquarters when it moves from Torrance in the fall.
- Dexus Property Group bought the headquarters of furniture retailer Living Spaces for $26 million. The building, at 14501 Artesia Blvd. in La Mirada, has 278,000 square feet. The previous owner was LBA Realty of Irvine. Living Spaces has leased the building until 2016.
- Sohnen Enterprises purchased a 161,000-square-foot building at 12252 Whittier Blvd. in Whittier. Bed component company Leggett & Platt was the seller. Sohnen, which refurbishes items returned to stores, moved from Santa Fe Springs. Financial terms were not disclosed.
- Phoenix Warehouse, a logistics company that handles shipments from the Long Beach port, secured a five-year lease for 220,000 square feet at 15927 Distribution Way in Cerritos. Financial terms were not disclosed.
- TA Associates Realty bought a nine-story building at 898 N. Sepulveda Blvd. in El Segundo for about $24 million. The building has slightly less than 100,000 square feet and a parking structure. Trammell Crow was the seller.
- Soderstrom Family Trust purchased a warehouse at 2525 El Presidio St. in Carson for $5.9 million. The seller of the 78,500-square-foot building was Greenball Corp., a tire manufacturer. A Soderstrom family-owned plastics manufacturing firm will occupy the premises.
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