SAN GABRIEL VALLEY: Dearth of Inventory Spurs Competition Among Property Buyers

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Sales and lease activity in the San Gabriel Valley industrial market slowed in the first quarter, signaling what might be a flat year after a brisk 2012, which reflected a recovery in importing after the Japanese tsunami disaster.

Rents have held steady at 42 cents for more than a year, according to Jones Lang LaSalle Inc. The vacancy rate inched up to 5.6 percent from 5.4 percent in the fourth quarter and is up from the 5.1 percent year to year.

Given a shortage of open land and the age of many local industrial parks, there is fierce competition among buyers. Two 20-acre San Gabriel Valley sites zoned for industrial use have seen multiple bids from buyers who had been sitting on the sidelines in recent years, said Stu Milligan, senior director at Cushman & Wakefield Inc.

“The area is home to many Asian-American export firms that are biased in favor of ownership because they view owning their building as a safety net if their business is not so good in the future,” Milligan said. “They are expanding out of leased facilities or smaller purchased space.”

The lease market was slow but steady in the first quarter, with a continuing bunker mentality among some of the area’s business owners, he said. Concerns about the economy continue to be the main impediment to more hiring and expansion.

“The majority of users continue to fill their existing space and do OK business, but they are not bullish to the extent that they’re going out hiring or looking to undertake significant expansions until the economic landscape is better known,” he said.

The pace of activity could crank up significantly in the second half of the year, when the City of Industry’s long-term property management plan is to be released. The city is one of the largest remaining holders of redevelopment property, with upwards of 70 parcels within its boundaries.

Since the state abolished redevelopment agencies last year, the city will have to dispose of those properties under that long-term plan. It is not known whether the sales will be done through public or private bidding, but preference is expected to be given to existing local businesses that want to expand; create jobs; and improve older, existing properties that will boost the city’s aggregate tax value.

Letters of interest on the redevelopment properties are being collected now, Milligan said.

– Karen E. Klein

Main Events

*Port Logistics Group leased 775,000 square feet at 108-288 Mayo Ave. in City of Industry from Majestic Realty. That makes the apparel-handling firm one of the largest tenants in the city, with nearly 1.9 million square feet in four different facilities. The lease rate was reported at 39 cents triple net per square foot.

*A 26,000-square-foot building, constructed in 2007 in the Koll Industry Center at Arenth and Azusa avenues in City of Industry, sold to Calvin Nguyen for $3.8 million. The building is a mile north of the 60 freeway and sits on 1.38 acres.

*Heitman LLC of Chicago purchased a pair of buildings totaling 104,544 square feet at 17531 Railroad St. in City of Industry. The sale price was reported at $14.8 million. The multitenant property was part of a $543 million, 25-property portfolio sale.

*San Gabriel real estate investment firm SIO LLC purchased a 125,600-square-foot industrial property at 140 N. Orange Ave. in City of Industry. The property was built in 1978 as a furniture manufacturing plant and had extensive deferred maintenance.

*US Furniture Inc. leased 59,800 square feet at 801-811 Sentous St. in City of Industry in a one-story building constructed in 1985 on 6.2 acres.

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