Industrial space is limited in Long Beach but the city has still failed to sell several properties close to the nation’s second-largest port.
The four buildings, ranging from 12,000 to 84,000 square feet, were acquired by the city with the dissolution of the Long Beach redevelopment authority in 2012 and have been waiting for a buyer since January.
The properties are less than two miles from the port, seemingly a premium location for companies looking for industrial land near warehouses and railroads.
Now the finger of blame for the failure to sell is being pointed at Long Beach officials.
“They probably didn’t expose it properly,” said Barry Hill, executive vice president at the El Segundo office of real estate services firm Jones Lang LaSalle.
“There are lot of investors and developments in the market and an extremely high demand,” added Hill, who said he found it surprising there were no takers.
“The city has very high expectations,” said Lary Carlton, a senior vice president at the El Segundo office of real estate firm Colliers International. “It wants high-tech companies to move to Long Beach, but the tech companies don’t want to go there. They would rather go to El Segundo or Costa Mesa. Those Long Beach properties are best for companies who need storage for heavy equipment, buses, trucks, or cars.”
“We’re looking for industrial development and companies that create jobs,” said Michael Conway, the city’s director of economic and property development.
He added that the city is prepared to wait for the right deal and is in no rush to sell its properties, the price of which he declined to disclose.
But Carlton said the city should fulfill the demand created by the market rather than look for companies that are not interested in moving to Long Beach.
Yet those in-demand uses, including for trucking and warehousing, would require various conditional use permits, creating additional hurdles for businesses.
“Those users are looking at it and want to go somewhere else,” Carlton said. “Even financially capable companies would much rather go to another city. They feel completely ripped off by the city in terms of permits and fees.”
The situation has helped boost Hawthorne and El Segundo, which offer industrial space near Los Angeles International Airport.
The industrial vacancy rate in Long Beach is hovering at a historic low level. The availability of industrial space there has plummeted from 6 percent in 2013 to 0.9 percent last year, according to the 2015 Los Angeles and Long Beach Industrial Market report by commercial real estate services firm Lee & Associates.
Meanwhile, the average price of industrial property in Long Beach is climbing. The average sale price jumped in the fourth quarter of last year to $137 a square foot from $126 a square foot in the third quarter, according to the same report. Rental rates increased in that time period to 75 cents a square foot from 73 cents.
