By GARRY CARTER
Activity leveled off in the Mid-Counties industrial market in the first quarter, following record gross absorption of more than 10 million square feet last year.
Total absorption was 1.6 million square feet in the quarter, with net absorption of 14,968 square feet.
Although activity fell off during the first quarter compared to the final three quarters of last year, the actual activity and absorption was similar to the first quarter of 2004.
Asking lease rates remained flat at 52 cents per square foot net. Actual vacancy in the Mid-Counties industrial market fell to 3.3%.
Demand by owner-occupiers to buy industrial buildings remained high during the first quarter.
The 386,000-square-foot, eight-building project under construction by Sares-Regis Group, known as Bloomfield Business Center II, is entirely in escrow in Santa Fe Springs.
The largest sale in the first quarter was the $11 million sale of 150,000-square-foot Heritage Crossing Business Park in Santa Fe Springs.
The lack of supply in submarkets surrounding the Mid-Counties industrial market should increase demand for lease space.
Activity at the Port of Los Angeles is set to drive demand for space in the Mid-Counties region.
As a result, lease rates should rise in the months ahead. Landlord concessions such as free rent have all but disappeared. Rent increases compared to a year ago are becoming the norm.
Lack of available quality industrial buildings for sale will drive prices to record highs before the end of the year.
Buyer demand continues to outstrip supply and building planned or under construction are at a three-year low.
Overall, the Mid-Counties industrial market will see continued low vacancy, little new construction and increasing sale prices and lease rates for the balance of the year.
Carter is a vice president in the Anaheim office of CB Richard Ellis Group Inc.
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