By BOB GOODMANSON
West County industrial continues to hang in there, despite a general market downtrend.
According to a recent 2009 Chapman University Economic Report, the local economy could see the beginnings of a recovery in 2009, but it could be a long, slow slog before employers start hiring again in the fourth quarter. Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman, also predicts that we will come out of the existing recession by the third or fourth quarter.
With about 40% of goods coming to the U.S. through the ports of Long Beach and Los Angeles, trade and warehousing continues to be active. As an example, seven of the 10 buildings in Overton Moore Properties’ Pacific Gateway Business Center in Seal Beach, a development totaling 830,000 square feet, have been recently sold.
Owner-occupied properties for sale continue to make up the most active segment of the market, fueled by relatively low vacancy and good demand, with a prevalent trend to quality buildings. Companies locating to the Seal Beach area are a mix of the apparel, automotive, household products and appliance, aerospace, pharmaceutical, construction, electronics and banking industries.
On the other hand, the slowing number of deals, especially in the leasing segment of the market, has forced lease rates down. More and more buildings are coming on the market for sublease.
The overall available supply of industrial buildings remains relatively tight. Currently, there are no new buildings under construction. There are still significant deals being completed.
Recent notable leases include a 10-year lease with Umeco PLC for 115,870 square feet, a 101,618-square-foot lease renewal with Quiksilver Inc. and a 20,000-square-foot lease with Future Fins,all in Huntington Beach. In Garden Grove, CustomFab Inc. leased a 50,000-square-foot building. Also, a 76,161-square-foot building in Seal Beach’s Pacific Gateway sold to apparel maker Affliction Inc.
Pacific Gateway has seen recent activity because of its proximity to Los Angeles and the ports of Long Beach and Los Angeles. Absorption continues with companies wanting to operate in an area that has a low crime rate and high quality of life.
Overall, the West County industrial market remains healthy, but not immune to the economic downturn. Supply and demand coupled with the general economic recovery will remain the determining factors in 2009.
Goodmanson is a senior vice president in the Newport Beach office of CB Richard Ellis Group Inc.
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