The mid-counties submarket, which includes portions on North Orange County and southern Los Angeles County, continued to show signs of recovery in the fourth quarter.
The mid-counties area saw 2.5 million square feet of activity, a gain of about 55% from same period a year ago and the highest quarterly mark in five years.
Included in the activity was a relatively modest 86,340 square feet in positive net absorption. That followed several robust quarters and brought net absorption for the year to more than 900,000 square feet.
The industrial segment accounted for the entire gain in net absorption in the fourth quarter, offsetting a slight decline for the office segment of the mid-counties market.
The fourth quarter showed even more dramatic improvement when compared to the recent recession. The absorption seen in the fourth quarter is an increase of 148% from the same period in 2008.
The number of deals also rose dramatically in the final quarter of 2010, with a total of 51 sales and leases compared to 36 a year earlier.
Another encouraging sign: activity was spread across all segments of the market.
Buildings from 10,000 to 99,999 square feet represented 1.6 million square feet of the activity, up 83% from about 850,000 a year earlier.
Activity for buildings bigger than 100,000 square feet grew by 24%.
Improvements in the general economy, a 20% increase in shipments at the ports of Los Angeles and Long Beach, and higher rates of consumer confidence helped.
Lease rates and sale prices remained attractive, while relatively favorable interest rates also helped.
The industrial segment saw the most sales.
The gain continued a streak that included each quarter of 2010. That follows eight consecutive quarters of declines during 2008 and 2009.
The 51 deals in the fourth quarter included 43 leases.
The largest leases in quarter include a deal for about 400,000 square feet in Santa Fe Springs for High Point, N.C.-based New Breed Logistics; Gardena-based S&S/Americana Activewear’s lease of 239,872 square feet, also in Santa Fe Springs; E.T. Horn’s lease of 120,348 square feet in La Mirada; and Integrity Retail Distribution’s lease of 84,772 square feet in Santa Fe Springs.
Eight sales in the fourth quarter combined for more than 450,000 square feet.
The recent streak of positive absorption cut the availability rate down to 8.5% at the end of the fourth quarter from an all-time high of 11% posted in January 2010.
The vacancy rate fell to 3.7% from a high of 4.7% posted in February 2010.
The improvements still leave the mid-counties market off the 3.4% availability rate and 1.1% vacancy rate posted in 2007.
An increase in demand has helped stabilized asking lease rates to 49 cents per square foot for two consecutive quarters.
Sale prices also appeared to turn a corner by the end of the fourth quarter, with an average asking sale price of $99.70 per square foot, up from $93.51 per square foot in the prior quarter.
Most observers acknowledge that a recovery in ongoing, although there remains ground to make up.
That has led investors to return to the market and brought the chance that speculative development could even return to the mid-counties market in 2011, ending a three-year hiatus.
Bonwell is a first vice president in Anaheim office of CB Richard Ellis.
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