The Mid-Counties industrial market showed renewed signs of life in the first quarter, with increase leasing and purchasing activity.
There was a 51% increase in transactions from the fourth quarter and 60% increase from a year earlier with 47 lease signings and nine sales. The transactions accounted for 2,195,187 square feet of property, 80% more than in the fourth quarter and 32% more than a year earlier.
The levels also compare favorably to the previous peak in the first quarter of 2007, with transaction volume up 30% and gross activity up 28%.
Net Absorption
Net absorption was also positive for the second consecutive quarter, totaling 745,716 square feet. That compared to a negative 63,308 square feet posted in the same period a year ago.
Activity was most pronounced in the smaller size range of less than 100,000 square feet, where volume was up 75% and gross absorption was up 102% compared to the first quarter of 2011. Transactions under 50,000 square feet were up 58% in a year-over-year comparison.
The resurgence of the smaller users is especially encouraging, as this group was most adversely affected by the financial crisis and great recession. Larger users remained active in the quarter, as they have been since the recovery began in mid-2010.
RockTenn leased a 110,609-square-foot space in Buena Park from Crown Associates Realty. And Mitsubishi moved across the street to lease 110,000 square feet from Warland in Cypress.
The overall availability rate in the market decreased to 7.5% in the first quarter, down almost 10% from the same period a year ago. The vacancy rate also decreased 10%, to 3.6%.
Speculative development and investment is picking up in the market.
Verde Realty closed on the 290,920-square-foot AMCOR building in Buena Park in January as a part of a UBS portfolio of industrial assets.
Office Vacancies
It’s worth noting that vacancy levels in the Mid-Counties’ competitive office market continue to climb and now stand at an average 13.8%. That’s 5% higher than in the first quarter of last year.
There was about 49,000 square feet of negative net absorption of office space in the first quarter. The Cypress Crossroads office property recorded 29,585 square feet of negative absorption.
Office rental rates continued to fall, shedding an additional 4 cents in the first quarter for an average asking lease rate of $1.94 per square foot.
McGeagh is a senior vice president in the El Segundo office of CBRE Group Inc.
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Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
