Hackman Capital Partners bought a 57,600-square-foot industrial building at 9000 Bellanca Ave. in Los Angeles for $6.5 million from Rexford Industrial Realty Inc. in March. Hackman also bought a 22,000-square-foot industrial building at 9010 Bellanca for $3.25 million from a limited liability corporation in March.
Floor and Decor Outlets of America Inc. signed a 124-month lease for 221,000 square feet in Carson’s Watson Industrial Center. At 69 cents a square foot, the deal with Watson Land Co. is valued at about $17.8 million.
DHL Global Forwarding signed a 71-month lease with Evergreen Industrial Properties for 234,800 square feet at 4000 Redondo Beach Ave. in Redondo Beach. The deal was valued at about $11.2 million.
Epson America Inc. signed a 63-month lease for 338,300 square feet at 1650 Glenn Curtiss St. in Carson with Carson Cos. The deal is valued at about $13.6 million.
The South Bay industrial market has rebounded to the point that average asking rents have matched prerecession highs.
Asking rents hit 65 cents a square foot in the first quarter, up a nickel from a year ago, according to data from Jones Lang LaSalle Inc., making the submarket the second most expensive in Los Angeles County.
“The lack of new development, coupled with a very strong local and national economy, creates the setting for continuing rental rate and price escalation, which are now at or exceeding the most recent peak levels,” said Luke Staubitz, executive vice president of Jones Lang LaSalle.
He pointed to first-quarter leases by Atlanta flooring retailer Floor and Decor Outlets of America Inc., which is leasing 221,000 square feet in the Watson Industrial Center in Carson at nearly 69 cents a square foot, and DHL Global Forwarding’s lease for 234,800 square feet in Redondo Beach at 67 cents a foot, as helping drive the average up.
As the submarket’s vacancy rate fell to 2.9 percent in the quarter, from 5.4 percent a year ago, a lack of large spaces has been a driver for the rent increases.
That scarcity and the rise in rents have also drawn investors. The amount of property leased and sold in the first quarter was 3.3 million square feet, up nearly 38 percent from the 2.4 million square feet in the prior quarter.
While the industrial market remained robust, that did not carry over to the office market, where the overall vacancy rate rose to 22.2 percent from 21.6 percent last quarter and from 21.4 percent a year ago. At 15.3 percent, downtown Long Beach had the lowest vacancy rate in the submarket. El Segundo was next best, at 17.6 percent. The Los Angeles International Airport-Century Boulevard portion of the submarket still has gaping holes thanks to a 46.8 percent vacancy.
Overall, the 27.3 million square foot South Bay office market saw 147,000 square feet come back on the market – with positive absorption in some sectors outweighed by the more than 155,000 square feet dumped back on the market in El Segundo.
But the negative net absorption numbers are misleading, said Jason Fine, vice president and national director of Jones Lang LaSalle, because they don’t take into account tenants who have signed deals for properties being redeveloped but haven’t moved in yet.
He said El Segundo’s numbers suffered from this phenomenon. Though its vacancy rate rose to 17.6 percent in the first quarter from 16 percent the prior period, rental rates rose to $2.72 from $2.67 a year ago.
“Landlords are developing these properties to keep up with the market (demand) and are able to charge higher rental rates,” Fine said.
One example is Sanrio Co., which will move this summer into the nearly 29,000-square-foot space it leased in February at 2101 El Segundo Blvd. from Bixby Land Co. Monthly rents at the building are $3.40 a square foot according to real estate data provider CoStar Realty Information Inc.
A trend in the El Segundo area is that potential tenants are focusing their searches exclusively on El Segundo now, Fine said, compared to looking at two to three other markets, which they used to do. That’s due to the pull of the nearby beach cities, he said.
“It’s the beach lifestyle, and the workforce that has been left behind from others, and a lot of executives (decision-makers) are living in Manhattan Beach and other beach cities,” he said.
– Carol Lawrence
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