Major events in Los Angeles County commercial and industrial submarkets in the second quarter.
After a strong start to the year, sales and leasing activity slowed in the South Bay’s industrial market during the second quarter.
The change, which mimicked the sputtering economic recovery, was striking. The market gave back 70,344 square feet after absorbing 530,557 square feet in the first quarter, according to Grubb & Ellis Co.
“There was a lot of positive thinking going on in the first part of 2011,” said Jim Biondi, a senior vice president at Grubb & Ellis. “That positive feeling had worn thin by the second quarter.”
Along with a lack of demand caused by a sluggish economy, brokers said the lack of activity is thanks to a dearth of quality industrial properties. “When there is someone in the market, there’s not a lot of choice,” said Eric Knirk, vice president of Fremont Associates in Torrance.
Companies want Class A warehousing facilities with modern docks, and both Knirk and Biondi said there aren’t enough in the South Bay. “For Class A, I would venture to guess the vacancy factor is less than 1 percent because of such a low inventory,” Biondi said.
Chuck Berger, a Grubb & Ellis senior associate who focuses on the Mid-Cities area, said Class A buildings are largely taken too but there has been slowdown in sales and leasing of Class B and C spaces. “There hasn’t been a trickle-down effect yet,” he said.
The vacancy rate in Mid-Cities climbed by half a percent to 4.1 percent – the first time vacancy rates there rose since the end of 2009.
In both markets, asking rents rose slightly – Mid-Cities by 2 cents and South Bay by a cent – but landlords remain willing to deal.
“If a landlord has a tenant in a building and the lease is coming up, they are cutting their rents and dropping their prices,” Knirk said.
- Ceva Logistics, a unit of London-based Ceva Group Plc, renewed its lease for a 305,000-square-foot warehouse at 1900 S. Western Ave. in Torrance and signed a new lease for a 285,000-square-foot warehouse at 18120 Bishop St. in Carson. Both are five-year deals.
- Ozburn-Hessey Logistics LLC leased a Carson warehouse that is still under construction. The 224,600-square-foot building, in the Watson Corporate Center at 2255 E. 220th St., should be finished by year’s end. The 64-month lease with Watson Land Co. is valued at $9 million. OHL leases other facilities in the area and is expanding its South Bay presence.
- AZ West, a container freight and logistics company with offices in Compton, leased a 302,400-square-foot warehouse in Carson, also in the Watson Corporate Center. The company is relocating from another facility. The 72-month lease is valued at $11 million.
- CB Richard Ellis Group Inc. bumped up its lease at 2221 Rosecrans Blvd. in El Segundo from 12,000 square feet to 30,000 square feet as it consolidates its two South Bay offices. With the new lease, CBRE will occupy more than half of the two-story building in the Continental Park complex. Financial terms were not released. CBRE will vacate its 15,000-square-foot office at 990 W. 190th St. in Torrance.
- Label manufacturer Achem Industry America Inc. purchased a 128,000-square-foot warehouse and distribution center for $10.6 million. The warehouse, at 13226 Alondra Blvd. in Cerritos, was sold in May by Oltmans Constrution Co.
For reprint and licensing requests for this article, CLICK HERE.