The Mid-Counties submarket is a diverse, desirable industrial submarket along the boundary of Los Angeles and Orange counties.
While the economy has taken a toll on landlords and businesses alike, we appear to be entering a noticeable period of recovery as evidenced by three straight quarters of positive net absorption through September.
This trend, coupled with year-to-date gross activity matching that of the same period of 2006, gives solid rational for optimism.
In the third quarter, tenants and buyers continued to hold the upper hand. Overall, the market remained driven by price.
Landlords remain anxious to limit their downtime and are willing to get aggressive with the mindset that overall market conditions will improve in the next 24 to 36 months.
The result is a continued uptick in gross activity with a total of 5.3 million square feet through the first three quarters of 2010 as compared to 3.4 million for the same period a year earlier, a 55% increase.
Deals also have been on the rise with 131 completed sales and leases through the first nine months of 2010—a 108% increase from the same period in 2009.
Gross activity during the third quarter totaled 1.6 million square feet based on 44 deals in comparison to the third quarter 2009 with 1.6 million square feet of gross absorption and 24 deals.
Positive net absorption of 746,990 square feet for the third quarter illustrates the shift and momentum in the market as compared to the negative absorption of 44,832 a year ago.
Investment activity increased in the third quarter, with TA Associates buying a 210,300-square-foot, single-tenant leased building in La Mirada from Fritz Duda of Newport Beach-based Fritz Duda Co.
Prologis acquired two buildings in Cerritos from Bechler Corp.: a 159,000-square-foot property leased to Triple A Containers and a 113,899-square-foot building leased to Spectrum Plastics.
Landlords and sellers continued to adjust their expectations. Third-quarter average asking lease rates decreased by 8.2% from a year earlier to 49 cents per square foot. The average asking sale prices declined by 7% to $93.51 per square foot. Deals are being completed for significantly less.
With a central location, close proximity to the ports of Long Beach and Los Angeles, a modern functional industrial base and its clean, safe environment, the Mid-Counties should fare better than most as the economy continues to recover.
Moreno is an associate in Anaheim office of CB Richard Ellis.
The Real Estate Watch Chart
Net Absorption, Rates, etc. is provided in a Adobe Reader .pdf print-friendly file.
