First-quarter activity in the Mid-Counties industrial market continued to be led by users of 10,000- to 60,000-square-foot properties, which made up 44 of the 51 transactions.
The roughly 1.9 million square feet of total gross activity was up 15% year-over-year in the same number of transactions.
The increase in demand continued to eat away at the supply, as reflected in the drop in the availability rate from 7.1% in the first quarter of 2013 to 6.5% in this year’s first quarter.
The market straddles the border of Los Angeles and Orange counties, encompassing Santa Fe Springs, Cerritos, La Mirada, Paramount, Downey, Whittier, Norwalk, Lakewood, Bellflower, and Artesia in L.A. County, and Buena Park, Cypress, La Palma, and Los Alamitos in Orange County.
Class A, B
Class A space remained in limited supply, which has been the case for well over a year. But an uptick in activity for class B space is beginning in which there are occasional backup offers for for-sale and for-lease properties. Tenant interest from multiple parties is rising for class A space, and demand continues to strengthen for space under 100,000 square feet. The market is slowly turning in the landlord’s favor as supply continues to decrease each quarter.
Activity among large occupiers continued in the first quarter, when there were four transactions of more than 100,000 square feet, one more than in the previous quarter. The larger deals in the quarter included Dynamic Worldwide Logistics leasing 238,270 square feet from Prologis Inc. in Buena Park as an expansion from its 400,000-square-foot headquarters in Santa Fe Springs. Faro Logistics Solutions Inc., after investigating options in the market, renewed its 155,408 square feet in Santa Fe Springs, and Suddath Relocation renewed its 106,118 square feet in La Mirada.
Absorption of large blocks of space will increase in the second quarter, as a number of transactions of more than 100,000 square feet are close to completion.
This year, there’s been a positive trend of confidence in the market among occupiers, developers and investors. Stability in the stock market and the national economy, along with interest rates still hovering around all-time lows, has had a significant effect on the outlook for the Mid-Counties market this year, in addition to the historical appeal of the area due to the close proximity to the Los Angeles and Long Beach ports, appealing housing options, and a functional industrial base.
Research and analysis provided by CBRE Research
