Real Estate Watch: Mid-Counties
Brisk Lease and Sale Activity in Mid-Counties
By GARRETT CARTER
Lease and sale activity in the mid-counties industrial market increased dramatically in the second quarter.
After a weak first quarter, gross activity rose to more than 2.2 million square feet, making it the most active quarter since the second quarter in 2001.
Several large transactions led the activity increase, including Home Depot Inc.’s lease of 274,000 square feet at the Prologis Mid-Counties Distribution Center in Buena Park and Nishimoto Trading Co.’s lease of 220,000 square feet in Golden Springs in Santa Fe Springs.
Total available space in the mid-counties’ industrial market inched up to 8.9 million square feet versus the first quarter.
The availability rate in the second quarter came in at 7%, slightly above the 6.9% availability rate at the end of the first quarter.
Meanwhile, overall lease rates decreased one cent from both the first quarter and the same period a year ago. Sale activity during the second quarter totaled about 371,000 square feet, more than double activity during the first quarter.
Continued low interest rates, coupled with increased new construction of small- to medium-sized buildings, have made buying an attractive alternative to leasing. This should continue through the end of the year with construction and planned buildings with less than 50,000 square feet of space leading the activity.
Net absorption is 368,000 square feet through the fist half of the year, with gross activity at about 3.6 million square feet in the period, which is significantly more than a year ago.
Building sale activity would be higher if there was more space available. Continued low interest rates and availability of capital drive the building sale market, especially in buildings smaller than 50,000 square feet.
Construction activity continues to be strong, with more than 2 million square feet being built at the end of the quarter. Much of this new space will be finished in the fourth quarter.
Demand for new class A industrial space in the mid-counties market continues to be strong. These new buildings are expected to be well received by the market.
Overall activity in the mid-counties continues to rebound from the slowdown last year. The market is set for a strong second half.
Carter is a vice president in CB Richard Ellis’ Southern California Manufacturing Facilities Group.
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