The industrial segment of the mid-counties submarket continues to show signs of a slow rebound.
The mid-counties area straddles the border of Orange and Los Angeles counties.
The industrial segment includes nearly 132 million square feet of space overall.
The office segment is about 6.3 million square feet.
Gross Absorption Up
The mid-counties industrial segment had slightly more than 2 million square feet of gross absorption in the second quarter, up about 20% from the prior period. Year-to-date gross absorption is nearly 3.7 million square feet, about on pace with the first six months of last year.
Mixed signals abound, however.
The second quarter saw about 224,000 square feet of negative net absorption in the industrial segment. The office segment had about 15,000 in positive net absorption.
The second quarter also turned in a weak performance on gross absorption for buildings of more than 100,000 square feet. They accounted for just 348,746 square feet of gross absorption, a drop of about 65% from the first quarter.
Smaller Does Better
Buildings of less than 100,000 square feet accounted for about three-quarters of the leases and sales in the mid-counties industrial segment in the second quarter. Almost half of all leases were for buildings smaller than 20,000 square feet.
That’s about in line with totals for last year, when buildings of less than 20,000 square feet accounted for 46% of all leases in the mid-counties area.
There were 42 leases in the mid-counties industrial segment overall, totaling nearly 1.5 million square feet.
Notable deals included Larry Hansel Clothing, which relocated from Commerce to La Mirada and leased 119,336 square feet. Simplex Grinnell leased 87,270 square feet in Santa Fe Springs. The largest user sale in the second-quarter purchase was Achem Products’ buy of a 128,000-square-foot building in Cerritos.
Decline
There appears to be some positive indicators for landords, who have seen the amount of available space decline in the mid-counties submarket amid the mixed signals.
The vacancy rate finished the second quarter at 4.1%, up from 4% in the prior period but down from 4.5% a year earlier. That trend indicates that modest increases in asking prices for both leases and sales could be coming.
There also are indicators of renewed interest from developers who are striking deals for idled manufacturing facilities and working through entitlement and environmental challenges with an eye on developing efficient industrial facilities.
Foley is a senior vice president in the Los Angeles Central office of CBRE.
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