Majestic Realty is constructing the newest addition to its Crossroads Business Park in City of Industry. The Park at Crossroads, at 13300 Crossroads Parkway North, will total 166,000 square feet of Class A office space.
Xencore entered into a new lease for the 25,000 square feet it occupies at 111 W. Lemon St. in Monrovia. The biopharmaceutical company renewed earlier than expected, replacing an agreement not set to expire until mid-April. The new lease, which includes a five-year extension option, will run through June 2020.
Grand Pacific Financing leased 9,800 square feet at 901 Corporate Center in Monterey Park. The move will take effect in June.
A two-building portfolio at 924 Overland Court in San Dimas sold for $18 million, $3 million above asking price.
The year is off to a strong start for the San Gabriel Valley, where its commercial real estate market is once again demonstrating prerecession activity.
In the office sector, first-quarter vacancy stood at 13.1 percent, a slight but welcome downturn from the prior quarter’s 14.1 percent, according to data provided by Jones Lang LaSalle Inc. With 1.5 million square feet of office space available and a scant 166,000 square feet under construction, the office submarket is expected to gain strength well into the next few quarters.
“Business activity is increasing and so is the interest,” said Forrest Blake, vice president of DTZ. “The net absorption is positive for the first quarter of 2015, so we’re moving in the right direction. The market’s strengthening, no doubt about it.”
While San Gabriel Valley’s strength can be attributed to the makeup of its tenants – information, finance, government and education – it’s not immune to movement. A new lease agreement by Southern California Edison is largely responsible for the office submarket’s positive net absorption of 111,884 square feet. By July, the utility company will occupy 125,000 square feet on three floors at 2 Innovation Way in Pomona.
And, now that the “other valley” has landed one of the L.A.’s biggest lease deals of the year, it could very well set the tone for the next few quarters.
“What we’re hoping to see is small, healthy growth from companies within the San Gabriel Valley market,” said Linda Lee, senior managing director at Charles Dunn Co. Inc.
Asking rents in the office submarket remained steady at $2.17 a square foot.
In the San Gabriel Valley’s second-largest lease deal of the first quarter, Grand Pacific Financing agreed to occupy 9,800 square feet at 901 Corporate Center in Monterey Park. The move will take effect in June, according to data provided by DTZ.
The valley’s largest sale was an $18 million transaction that netted $3 million above asking price on two freestanding properties at Overland Court in San Dimas. The 98,000-square-foot office building at 924 Overland had previously been leased to Wescorp Federal Credit Union.
The valley’s industrial submarket also remained strong in the first quarter, as vacancies reached a firm 2.7 percent, down from 2.9 percent the previous period and 3.5 percent a year ago.
Sales and leasing activity spiked 13 percent in the first quarter, rising to 3.2 million square feet from 2.8 million in the prior quarter. Still, asking rents slipped by a penny in the quarter to 51 cents.
While landlords enjoy heightened demand, lessees and property hunters are working harder to find affordable space. One bright spot is the Mission 71 West Business Park at the east end of the valley. The industrial complex, which is nearing completion, is expected to add movement to the market with nearly 500,000 square feet of inventory.
The 91-acre project by Seventh Street Development in Pomona sits at the convergence of four freeways and will include four buildings ranging from 70,000 to 200,000 square feet. One of the buildings is already under contract, said Craig Furniss, president of Seventh Street.
The new construction, isolated as it is, signals a healthy response to the area’s commercial space crunch, one that could be followed by additional infill projects as the market continues to bounce back.
– Laurie L. Dove
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