Call it pent-up demand or a brighter outlook. Whatever the cause, sales and lease activity got off to a strong start this year in the San Gabriel Valley’s industrial market, with companies expanding into new distribution facilities and renewing long-term deals.
More than 600,000 square feet of warehouse space was absorbed, up 100,000 square feet from a strong fourth quarter. That drove down the vacancy rate three-tenths of a point to 5.1 percent, according to Jones Lang LaSalle Inc.
“Overall activity has been as strong as I remember it in the last five years,” said Kent Valley, senior vice president at Majestic Realty Co., the valley’s largest property owner.
The City of Industry company saw the vacancy rate on its 20 million-square-foot valley portfolio plummet from 12 percent to 3.5 percent after the firm closed a half-dozen deals.
Even so, average asking rents valleywide stayed flat at 42 cents a square foot, though landlords now have enough leverage to pull back on concessions. Jim Center, senior vice president at Grubb & Ellis Co. in City of Industry, expects Class A lease rates to trend up slightly before the end of the year.
“We’re seeing a consistent snowballing effect with people out in the marketplace and a volume of people looking to do deals. They recognize that our rates have bottomed out and we’re starting to see a scarcity of Class A space,” Center said.
As usual, the commerce was driven by Asian-owned firms importing goods from Pacific Rim manufacturers.
Consider Acme Furniture Inc., which sells pieces manufactured in China, Southeast Asia and Brazil. In a major expansion, it signed a 60-month lease for 500,000 square feet at 20002-20180 Business Parkway in City of Industry.
But big tenants like Acme could soon have a harder time finding such space. Center said they could be pushed out into the Inland Empire, particularly larger third-party logistics firms that need the high warehouse ceilings and specialized fire sprinkler systems not found in Class B and C space.
“We don’t have a lot of land left in terms of the larger chunks of space,” he said.
Barring another curveball to the economy, Majestic’s Valley expects the strong market to persist through next year. He already has offers on a lease expiring in the third quarter at the Grand Crossing Project in Industry. The 775,000-square-foot property was divided and sublet for the past two years by a former tenant.
“We want to get the whole building back and offer it onto the market,” he said.
Acme Furniture Inc., which sells furniture manufactured in Asia and Brazil, signed a 60-month lease for 500,000 square feet at 20002-20180 Business Parkway in City of Industry. The firm is expanding from the 350,000-square-foot headquarters building it owns elsewhere in the city. The company supplies national accounts and mom-and-pop furniture shops around Southern California. The deal starts at 45 cents a square foot, three cents higher than average asking rents.
Marge Carson Inc. purchased a 70,876-square-foot building at 1260 Grand Ave. in Pomona for just over $6 million. The Rosemead furniture maker has a large presence in High Point, N.C., as well as Southern California. The property includes 20,000 square feet of office space and sold for about $85 a square foot. It was previously owned by the corporate parent of Royal Cabinets in Pomona.
California Floral Imports Inc. sold a 63,000-square-foot Industry building at 14711 Clark Ave. to electronics firm Quest Components for $5.3 million. The property houses the company’s 50 employees in 3,500 square feet of office space.
Online computer hardware and software retailer Newegg Inc. renewed its lease for 200,000 square feet at 18045 Rowland St. in Industry. The Whittier company signed up for 60 months at 48 cents a square foot.
GPR Logistics, leased 205,000 square feet at 2849 Ficus St. in Pomona from LBA Realty Fund. The 24-month deal starts at 43 cents a square foot.
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