-Salsbury Industries Inc. bought a 100,000-square-foot, 36-year-old light industrial building at 13809 S. Figueroa St. in Los Angeles, for $12.4 million from Canmar Inc. in April.
-Montana Avenue Capital bought a 50,000-square-foot, 51-year-old warehouse and office building at 2400 Marine Ave. in Redondo Beach for $9.6 million from Klein Family Partnership in april.
-TDTF World Wide bought an 8,000-square-foot, 8-year-old industrial building at 3437 Jack Northrop Ave. in Hawthorne for $1.9 million from LBY Real Estate Investments in June.
-Keller Williams Realty Inc. leased a 10,000-square-foot office building at 830 S. Sepulveda Blvd. in El Segundo, for $4.25 a square foot in a 10-year deal from Federal Realty Investment Trust in June.
-Manduka leased a 15,000-square-foot office building at 2121 E. Park Place in El Segundo for $3.65 a square foot for 48 months from Invesco/State Street Ventures Properties in April.
Years of dismal activity in the South Bay office market finally gave way to good news in the second quarter as rents rose, vacancies declined and much more space was absorbed.
The area made several gains in key indicators of market health. The vacancy rate slipped two-tenths of a point to 21.7 percent from a year ago and was a half-point lower than in the first quarter.
Average asking rents were up 2 percent from a year ago to $2.44 a square foot and more than 130,000 square feet were taken off the market – a reversal from the nearly 150,000 square feet that came back on the market in the first quarter, according to data provided by Jones Lang LaSalle Inc.
Several South Bay submarkets saw strong growth in rental rates, led by downtown Long Beach, where the average asking rent rose 6.8 percent to $2.50 a square foot compared year to year.
Most of the good news happened in the beach cities. Average asking rents rose to $2.70 from $2.54 a square foot in the previous quarter. Though still high, vacancy rates there were on the decline, dropping to 23.6 percent from 29.3 percent a year ago and 24.4 percent in the first quarter.
Rents in El Segundo rose slightly to $2.78 in the second quarter, prompting some prospective tenants to look for the next best thing, said Jason Fine, a JLL vice president. Tenants who were once paying around $2.20 a square foot are now looking at the Century corridor.
One project attracting some of that attention is Liminal Space’s renovation of an 80,000-square-foot, three-story brick building at 6171 W. Century Blvd. into creative office space.
“It will be 20 to 30 percent higher than rates in the Century corridor, but still 30 to 40 percent lower than Playa Vista and El Segundo for a similar quality space,” Fine said.
South Bay’s industrial market, which leads the nation because of its close proximity to the ports of Long Beach and Los Angeles and airports, got even stronger in the second quarter.
The vacancy rate for industrial properties in the area plunged to 2.4 percent from 5.1 percent a year ago.
“We’re witnessing historical lows, at least in my 27-year career,” said Luke Staubitz, executive vice president for JLL. “I think it’s a combination of factors, primarily the strength of the local economy – Los Angeles County and Southern California in general – and the traffic levels at the ports being back to pre-Great Recession levels.”
That may have contributed to the spike in deal volume. More than 6 million square feet were sold or leased in the second quarter, nearly twice that in the same period a year ago. Asking rents averaged 65 cents a foot a month, flat from the prior quarter and up 4 cents year to year.
– Carol Lawrence
For reprint and licensing requests for this article, CLICK HERE.