Vacancy rates in the South Bay’s commercial market were virtually flat in the fourth quarter as businesses held back on moves and expansion plans. The lack of movement reflected slow growth in port activity over the last couple of years and concerns over taxes going into the next year, brokers said.
The 25 million-square-foot office market returned 116,788 square feet to the market in the final quarter of 2012, according to data from Jones Lang LaSalle Inc., with the vacancy rate holding at about 21 percent. The rate in the region’s industrial market increased slightly to 6.2 percent compared with 5.8 percent in the same quarter the previous year.
“There’s not a lot of excitement to be talked about,” said Jim Biondi, executive managing director at Newmark Grubb Knight Frank. “Our market is driven by port activity, along with the airport. It has not been gangbusters.”
Industrial sales and leasing activity decreased by 29 percent from last year to about 4.1 million square feet. Asking rents fell to 55 cents, compared with 57 cents the prior year. Class A office rents increased by 3.6 percent, to $2.29 a foot.
Brokers said large businesses held off making major deals in the quarter, pending the results of the November election, changes to taxation and the results of effects on employee costs related to Obamacare.
Some deals that were expected to close in the fourth quarter probably moved into the first quarter of this year, said Bill Townsend, president of INCO Co. of Long Beach.
Low tenant demand is keeping pricing down despite low vacancy, said Eric Knirk, vice president at Fremont Associates Inc. in Torrance.
He did point to some activity, such the 216,407-square-foot lease taken by Towne Air Freight in Carson at 1000 E. 223rd St., a building owned by Watson Land Co. The 84-month deal was signed for 66 cents a foot.
Some institutional buyers were not shy. Prudential Real Estate Investors sold a nine-building portfolio of Class B space in Compton and Rancho Dominguez for $41.7 million to Alere Property Group LLC. The aggregate square footage of the properties is 432,631 square feet.
At 10 percent, El Segundo had the lowest office vacancy rate in Los Angeles County. The rate was down from about 14 percent in the year-earlier period. For the Los Angeles International Airport/Century Boulevard area the vacancy rate increased to 39 percent from 37 percent.
– Ryan Faughnder
A portfolio of nine warehouses and distribution buildings in Compton and Rancho Dominguez changed hands for $41.7 million. Alere Property Group LLC bought the 432,631 square feet of Class B property from Prudential Real Estate. The buildings range from 25,000 to 86,000 square feet.
Funai Corp. Inc., the sales and marketing unit of consumer electronics manufacturer Funai Electric Co. Ltd., agreed in November to lease 206,055 square feet at Harbor Gateway Center in Torrance. The company is leasing the property for 66 cents a foot.
Spring Street Pavilion, a 93,873-square-foot retail center in Long Beach located about a half-mile north of the 405 freeway, sold to Terramar Retail Centers in October. The Weingart Foundation sold the property, which is anchored by a Pavilion’s supermarket, for $42.2 million.
Towne Air Freight, a commercial transportation company, agreed to lease 216,407 square feet in a Carson building from Watson Land Co. for 66 cents a foot in October. The agreement was for 84 months.
An 11-story San Pedro office tower sold to Jupiter Holdings LLC in December. The building, Pacific Place, was built in 1990 and was sold by Pacific Place Associates LP. At 292,540 square feet, the building is near San Pedro’s Downtown Harbor expansion project and the Ports O’Call project.
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