By STEVE BATCHELLER
The Mid-Counties submarket saw an increase in gross absorption in the fourth quarter to 2.9 million square feet, compared to 1.6 million square feet in the first quarter.
That brought 2004’s total gross absorption to 10.4 million square feet, up 55% versus 6.7 million square feet recorded a year earlier.
2004’s gross absorption for the Mid-Counties region was the most ever.
Demand from users to buy buildings remained strong in the fourth quarter, though the supply of existing available space for sale is extremely limited.
This is especially true for buildings smaller than 30,000 square feet in size, though demand is strong in all size ranges,even buildings larger than 100,000 square feet.
Several new projects planned or under construction to meet the demand continued to see brisk activity at record prices in the period. Many sales comps for these new buildings have broken the $90 per square foot mark, while others have exceeded the $100 per square foot barrier.
Whether for investment or owner/user properties, a combination of low interest rates and flight from the equity markets has spurred heavy competition in the industrial market.
Business and consumer confidence continues to grow as the national economic indicators improve and corporate earnings are favorable.
It’s anticipated that these companies will make more long-term lease commitments and opt for the Mid-Counties infill market because of its central location, modern functional industrial base and clean, safe environment.
This bodes well for long-term values in the Mid-Counties submarket since the supply of existing space is low and land to develop is scarce.
The Mid-Counties industrial market is at the junction of the I-5, 605 and 91 freeways.
During the past two decades, the area has grown into one of the key industrial submarkets of Southern California. Part of the reason for this is its location in the busy “southwest corridor,” midway between the center of Los Angeles and Orange counties.
Not only has its location lured manufacturing, sales and warehouse operations, it also is well placed for related trucking and shipping operations.
Batcheller is a senior vice president in the Anaheim office of CB Richard Ellis Group Inc.
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