The South Bay office market tightened slightly in the first three months of the year, led by a rebound in the El Segundo/Manhattan Beach area after a weak final quarter of 1998.

The vacancy rate fell to 16.6 percent from 17.4 percent in the like period a year ago, according to Cushman & Wakefield Inc. It was the third time in the past four quarters that the vacancy rate has declined.

Vacancies in the El Segundo/Manhattan Beach market dropped to 11.7 percent from 13.8 percent for the four quarter of 1998, according to Cushman & Wakefield, and construction is making something of a comeback in the area about 452,000 square feet of space is currently being built.

Shamrock Development Co. is in the second phase of its 22.5-acre office and sound-stage project at 1600 E. Rosecrans on behalf of Raleigh Studios. Shamrock is building a 60,000-square-foot office site there, and Continental Development is proposing a two-building, 300,000-square-foot office park on the corner of Rosecrans and Douglas avenues, brokers said.

Construction on the first phase of the Raleigh Studios project, including sound stages and offices, was completed last year and is now 100 percent occupied, reflecting a trend within the entertainment industry to move south. The city of El Segundo is trying to lure the industry, having zoned land specifically for multimedia. Service, sales and technology companies also have been active in the area.

Brokers also said that one full floor 40,000 square feet has been pre-leased at Summit Commercial’s 238,000-square-foot building under construction in El Segundo.

Not every South Bay market is like El Segundo and Manhattan Beach, where lease rates have risen 12 percent from a year ago. But activity is picking up in the whole area, with rental rates that have been flat since the second or third quarter starting to move up.

“Momentum is building,” said Grafton Tanquaray, a broker at CB Richard Ellis. “Space is becoming available and vacancy rates are up slightly. There’s a lot of user activity.”

Not all the news is good. Vacancies in San Pedro rose to 12.1 percent from 7.2 percent, and while vacancies fell in the Los Angeles International Airport area by 1.9 percentage points, the rate remains high at 28.2 percent.

Still, a few leasing deals did take place in the area. Imperial Bank expanded its office space by 36,160 square feet at its corporate headquarters at 9920 La Cienega Blvd in Inglewood, while Carlsberg Management leased 21,095 square feet in the Telecredit Building at 6171 W. Century Blvd.

“It’s not terrible, but places (near LAX) are sitting longer,” said Izzy Eichenstein, president of Oakstone Co. “Rental rates are still holding their own, because owners are willing to wait it out.”

Other brokers pointed to the overall lack of airfreight space near LAX, causing airfreight companies to move east of the 105 Freeway. Hawthorne and Gardena both have a moratorium on construction of airfreight facilities because of the costs incurred by the cities to service such companies and maintain the roadways.

Among the other deals during the first quarter, Children’s Services leased the entire 60,804 square feet of the Park Del Amo Building in the Central Torrance Market. Candle Corp. bought the 335,000-square-foot former Rockwell engineering building for $30 million. And a group of investors led by Donald Lam purchased the 68,000-square-foot Albertoni Business Center at 637 and 649 E. Albertoni St. in Carson.

In investment deals, D.F. Diessner Acquisitions Co. bought the Paramount Industrial Park in Paramount for $17 million. The park consists of 393,000 square feet divided among 17 buildings.

Harold J. Belkin purchased 500-516 W. Florence Blvd., 31,700 square feet, in Inglewood for an undisclosed sum. And Lynch Entertainment bought the 30,000-square-foot building at 5900 Blackwelder St. in Culver City for $2.8 million.

On the industrial side, the vacancy rate fell to 4.0 percent from 4.1 percent in the last quarter of 1998. Tatsumi Intermodal (USA), Inc. leased 113,735 square feet at 19780 Pacific Gateway Drive in Torrance. New Age Electronics leased 109,593 square feet for five years at 21906 S. Arnold Center Drive in Carson.

In addition, Northrop Grumman Credit Union signed a lease for 35,000 square feet at 879 W. 190th St. in Gardena, 3,000 square feet of which is ground space.

“The overall vacancy in the South Bay industrial market is the lowest I’ve seen in 25 years,” said Jim Biondi, a broker at Grubb & Ellis. “There is a shortage of quality product and lease rates and sale prices are up 10 to 12 percent from a year ago.”

Major Events

? Imperial Bank leased an additional 36,160 square feet at its corporate headquarters at 9920 La Cienega Blvd. in Inglewood.

? Children’s Services leased the entire 60,804 square feet of the Park Del Amo Building in the Central Torrance Market.

? Candle Corp. bought the former Rockwell engineering building, with 335,059 square feet, at 201 N. Douglas St. in El Segundo for $30 million.

? Donald Lam and investors bought the 68,000-square-foot Albertoni Business Center at 637 and 649 E. Albertoni St. in Carson.

? D.F. Diessner Acquisitions Co. bought the Paramount Industrial Park in Paramount for $17 million.

? Lynch Entertainment bought the 30,000-square-foot building at 5900 Blackwelder St. in Culver City for $2.8 million.

? Tatsumi Intermodal (USA) Inc. leased 113,735 square feet at 19780 Pacific Gateway Drive in Torrance.

? New Age Electronics leased 109,593 square feet for five years at 21906 S. Arnold Center Drive in Carson.