Main events in Los Angeles County’s submarkets.
The vacancy rate dropped by 8 basis points in the San Gabriel Valley industrial market in the third quarter, driving average asking rents up from 42 cents to 45 cents. At 5.4 percent vacancy, San Gabriel Valley is the tightest industrial market in Los Angeles County outside of Central Los Angeles, according to data provided by Jones Lang LaSalle Inc. It is also the region’s least expensive.
Both leasing and sales activity were strong in the third quarter. Owner-user sales continued, with the availability of financing, and investors pursued older properties to rehab and modernize them, said Dain Fedora, Americas industrial research manager at Jones Lang LaSalle. “We’re seeing this happen across L.A. County, including in the San Gabriel Valley, where the market is tight from a land-supply standpoint.”
So far in 2013, 8.4 million square feet has been sold or leased in the submarket and there are a handful of developments on the table since demand for quality spaces outstrips supply.
“Most of the leases being done are short term and subleases. The dominant user group has been third-party logistics firms that are scrambling for contracts,” said Stu Milligan, senior director at Cushman Wakefield Inc., who noted that rising rental rates are symptomatic of a slowly improving economy and the fact that there’s very little vacancy.
Development deals struck in the quarter include the sale of 23 acres in La Verne, just northeast of Brackett Field airport, where a 150,000-square-foot industrial warehouse is expected to be constructed for sale, Milligan said.
“There’s been quite a bit of interest because that pocket has enjoyed good demand from industrial users migrating east from Pasadena and Arcadia, looking for more modern buildings,” he said.
A 26-acre site on Temple City Boulevard has been approved for an industrial condo development that will feature 5,000-square-foot buildings to be marketed to users such as machine shops by buyer Wohl Development.
The July sale of a 472,876-square-foot, Class C warehouse at 680 S. Lemon Ave. in the City of Industry for $26.7 million by Cardinal Capital Partners to Unical Aviation Inc. was typical of recent deals.
The buyer had secured a lease with an option to buy the property three-and-a-half years ago, after the previous tenant, Circuit City, went bankrupt in 2009. The aircraft and engine parts maker made more than $10 million in improvements prior to purchase and plans to use the property as a world headquarters. The parcel was appraised at $50 million by CBRE Group Inc.
– Karen E. Klein
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