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Friday, Aug 19, 2022

SOUTH BAY: Declining Port Traffic Prompts Rise in Industrial Vacancies

The vacancy rate in the South Bay’s port-dependent industrial market rose two-tenths of a point in the first quarter to 1.7 percent, mirroring a slowing in import traffic at the ports.

But even with the waning demand for container storage space, brokers saw a silver lining in the economic clouds: A weak dollar boosted port exports, picking up some of the slack.

Exports from the Port of Los Angeles increased 19 percent in January and 30 percent in February.

“With our large industrial space and historically low vacancy rates, it will take several quarters of negative economic trend before we could see any significant downturn in the South Bay market,” said Michael T. Sidney, senior director at Cushman & Wakefield.

Asking rents for buildings in the South Bay area increased to 68 cents, up three cents from the fourth quarter and one year ago. Brokers said a lack of developable land helped boost asking rents for the industrial buildings.

“There is a shortage of state-of-the-art industrial space, and as a result rents remain steady,” Sidney said.

Some of that strength was seen in a deal made by freight forwarder Carmichael International Service, which purchased a 150,000-square-foot building in Compton for $23 million, or about $153 per square foot.

Meanwhile, the vacancy rate for the South Bay office market rose a half-point since the end of the year to 12.5 percent. But brokers said tenants will continue to move into the area, which remains a cheaper alternative to the Westside.

Industrial Market At A Glance

Inventory: 219 million square feet

Under Construction: 882,080 square feet

Asking Rents: 68 cents


– Funai Corp., a sales and marketing company for consumer electronics products, leased a 206,055-square-foot building in the Harbor Gateway Center at 19900 Van Ness Ave. in Torrance. The five-year lease starts at 64 cents per square foot.

– Carson-based trucking and storage company USC Intermodal signed a 199,184-square-foot lease in Rancho Dominguez at 2626 E. Vista Industria. The 62-month lease starts at 55 cents per square foot.

– Television production company 3Ball Productions leased a 32,000-square-foot building at 2383 Utah Ave. in El Segundo for 60 months at $1.33 per square foot. Landlord Behringer Harvard has converted the building from industrial to office space.

– A 551,879-square-foot dry-goods distribution warehouse is under construction for Kroger Co. at 14900 Garfield Ave. in Paramount. Kroger, which operates Ralphs, signed a 30-year, $207 million lease for the Paramount Distribution Center building. It is expected to be completed by June.

– NDoors USA signed a lease for 5,698 square feet at 898 N. Sepulveda Blvd. in El Segundo. A U.S. subsidiary of a Korean online gaming company, NDoors is occupying ground-floor office space in a building that has been vacant for three years. The lease with Trammell Crow Co. is for 39 months at $2.10 per square foot.

– Private investor Case Young LLC purchased a 69,230-square-foot building for $6.3 million at 204 Rosecrans Ave. in



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