SAN GABRIEL VALLEY: City of Industry Paces Recovery That Has Run for Four Quarters

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The San Gabriel Valley’s slow, steady recovery continued during the last quarter of the year, much to landlords’ relief.

For the fourth quarter in a row, the historically tight industrial market experienced a slight dip in vacancies, to 3.6 percent, according to Grubb & Ellis Co.

That all amounts to a seven-tenths of a point drop compared with a year earlier, making it the most improved industrial submarket in Los Angeles County with the exception of downtown and the rest of Central Los Angeles. Sales and lease activity nearly doubled since the third quarter to 1.79 million square feet.

“Activity has picked up and vacancies are dropping,” said Tony Phu, a senior vice president at the L.A. office of Colliers International, who does business in the valley.

Much of the activity took place in the City of Industry, the area’s industrial hub, which saw the completion of some long-planned construction projects as well as some major sales.

Two notable examples were the completion of the Peck Center in December and the $14.4 million sale of another industrial park to Dexus Property Group, an Australian investment group based in Sydney. Tenants at the 157,300-square-foot park at 17531 Railroad St. include electronic companies, a fashion shoe maker and firms specializing in import-export.

“For a couple of years people have been talking about the gap between buyers and sellers,” said Dennis Keane, an associate at Lee & Associates. “That gap is now becoming smaller. I think what’s happened is that sellers have become more realistic, which has brought prices down and caused more buyers to come out of the woodwork.”

Indeed, asking lease rates fell to 41 cents per square foot, off 2 cents from both the third quarter and a year earlier.

All told, the market absorbed nearly 187,000 square feet during the quarter, considerably better than the 44,000 square feet it absorbed in fourth quarter 2009. For the year, the market absorbed 1.3 million square feet, much better than the nearly 2.3 million square feet given back in 2009.

MAIN EVENTS

  • Peck Center, an industrial business park at 2300 Peck Road in the City of Industry, was completed. Owned by Charles Dunn Equities II LLC, a Los Angeles investment development firm, the $20 million project begun in 2004 was stalled by the recession. Since opening in December, about 40 percent of the newly added 150,000 square feet of space has been leased. Tenants include distribution companies, a printer, an auto parts distributorship and an electronics manufacturer.
  • Huy Fong Foods, a Vietnamese food manufacturer based in Rosemead, broke ground on a new 655,000-square-foot headquarters in Irwindale. The 23-acre site, at Azusa Canyon Road and Cypress Street, is owned by the company. It is expected to be completed late this year. Financial details were not disclosed.
  • Port Logistics Group, which provides logistic services for companies that do business at the ports, leased a 449,000-square-foot distribution center in the City of Industry from ProLogus, a major San Gabriel Valley landlord based in Denver. The company, relocating from another part of the city, signed an 84-month lease worth $15 million. The new 501 Cherry Lane location is the former home of a Circuit City store.
  • Zoe’s Beverage Co. purchased a 53,918-square-foot building at 19907 E. Walnut Drive in the City of Industry for $5.66 million from Walnut-based real estate investment company Catesgarb Holdings Inc. Zoe’s plans to occupy one 16,588-square-foot unit, with Manufacture Resource Products taking the remaining two.
  • Troy Lighting Co. completed a 200,000-square-foot distribution center at 14500 Nelson Ave. in the City of Industry on property it had purchased from Chalmers-Vernon LLC for $15.1 million. The company is relocating from an older and smaller building at 14625 Clark Ave.

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