The Mid-Counties industrial submarket had total gross activity of 2.5 million square feet in the first quarter, up 26.6% from the 1.9 million square feet recorded a year earlier, though with fewer transactions—41 versus 51.
Large tenants led the charge with eight transactions of over 100,000 square feet, up from four a year earlier.
Deals
The largest deals in the quarter included O’Neill Logistics leasing 288,000 square feet from Westcore Properties in Santa Fe Springs; Gelson’s supermarket leasing 248,304 square feet; and USC-AMD leasing 214,849 square feet, filling the new 463,153-square-foot Freeway Springs building.
Prompt Apparel leased 170,682 square feet in La Palma; Bar Bakers leased 134,186 square feet in Los Alamitos; and Phoenix Warehouse expanded its Mid-Counties footprint by 103,200 square feet in Cerritos. Third-party logistics provider iLad Inc., after investigating its options in the market, renewed and expanded in 398,812 square feet in Cypress, as did Norman International for 132,888 square feet in Santa Fe Springs.
Large blocks of available space are now in very limited supply in the market.
The increase in demand continued to eat away at the supply, as reflected in the drop in the availability rate from 3.6% a year earlier to 1.5%. Class A space remained in limited supply, something that’s been the case for well over a year. Class B space is now being gobbled up, and we are seeing multiple offers on properties for lease and for sale.
The trends are pushing values higher and minimizing concessions. The market has clearly transitioned in favor of landlords as supply continues to decrease each quarter.
Tenants, developers and investors are all bullish this year. Stability in the stock market and the national economy, along with interest rates still hovering around all-time lows, are giving all a positive outlook for the U.S. economy.
Appeal
The Mid-Counties market, at the center of the Southern California basin, has historical appeal and is within close proximity to the ports of Long Beach and Los Angeles, offering appealing housing options; a modern, functional industrial base; a strong and diverse labor pool; and a clean and safe environment.
The approximately 133-million-square-foot market continues to be the first choice of many industrial users and promises to continue to ride the crest of the wave.
Research and analysis provided by CBRE Research
