The South Bay industrial market closed out 2008 in somewhat better shape than other Los Angeles County markets.
Yes, vacancy rates were on the rise, but it had the largest construction volume of any area.
In a market with a fair amount of older warehouse stock, landlords moved ahead with projects inked before the dive of the economy and real estate market. Construction hit 1.7 million square feet, more than double a year ago.
“Most developers are pretty courageous, many with a riverboat gambler mentality,” said Sam Foster, executive vice president of Jones Lang LaSalle Americas. “So even when the business cycle’s in a downturn, it’s classic of them to forge ahead, hoping it’ll get sold.”
Gamblers, indeed.
The combination of the mortgage meltdown, credit crunch and now widespread recession led to double-digit decreases in fourth quarter shipments at the ports of Los Angeles and Long Beach. That pushed the South Bay’s industrial vacancy rate up one-tenth of a point to 2.5 percent, the second highest rate in the county, according to Grubb & Ellis Co.
Also complicating matters: uncertainty over a $2.2 billion plan to clean up diesel emissions from trucks servicing the ports. Companies would be required to buy the latest trucks or be prohibited from serving the ports in 2012, but the plan has faced various legal challenges yet to play out.
“What you are seeing is a lot of people holding their breath until the plan is fully enforced or maybe even shelved altogether,” Bales said.
Industrial Market At a Glance
Inventory: 220 million square feet
Under Construction: 1.7 million square feet
Asking Rents: 69 cents
MAIN EVENTS
– Santa Fe Springs-based VSR Logistics, a freight-forwarding service, leased a 300,000-square-foot warehouse at 2000 E. Carson St. in Carson. The building is owned by Carson-based Watson Land Co. and was leased for five years for $9.5 million
– North Bergen, N.J.-based National Retail Transportation Inc. leased a 208,102-square-foot warehouse at 500 W. Victoria St. in Compton. The building was leased from owner Prudential Realty of San Francisco for 10 years for $16 million.
– Torrance-based developer Storm Properties Inc. sold a 16-building portfolio of industrial properties for $54 million in an off-market deal to TA Associates Realty of Boston. The 545,000-square-foot portfolio includes 10 L.A. County properties, most of which are in Storm Business Park, a large industrial campus in Torrance. Storm is building 173,000 square feet of new buildings and plans an additional 570,000 square feet.
– MagTek Inc., a maker of magnetic card readers that moved to Seal Beach, sold its former Carson headquarters and warehouse space to H & A; Shoes in two separate negotiations. The offices at 20725 Annalee Ave. sold for $2.52 million and a warehouse at 20801 Annalee Ave. sold for $2.58 million.
– Charter College, a Reno, Nev.-based vocational school, signed a five-year lease, valued at $1.8 million, for a 15,500-square-foot office building at 100 W. Broadway in Long Beach. The lease starts at $1.88 per square foot per month and will escalate by 3 percent annually. The building is owned by Adler Realty Investments Inc. of Woodland Hills.
