Industrial Highlights
Los Angeles | Q1 2014
Market fundamentals
driven by healthy
leasing activity
Considered to be the largest industrial lease in the Los Angeles area in
the past 25 years, Mercedes Benz occupied approximately 1.1 million
square feet at the former Boeing plant in Long Beach in early March. The
luxury automaker will utilize the facility for its western regional office and
as a vehicle preparation center. The site allows Mercedes to capitalize
on the Southern California seaports and the high-end consumer market
in the region, while adding some much needed jobs to the metro.
Fueled by significant leasing activity over the last several quarters, Los
Angeles’ overall vacancy rate has tightened to 4.5 percent, down 70
basis points from one year ago. The consistent improvement of the
market coupled with sustained tenant requirements, particularly in the
150,000- to 300,000-square-foot segment, has resulted in inventory
constraints in leading submarkets, such as the port-adjacent South
Bay. This will not only increase the likelihood of tenant migration to
the east, but also drive rent increases in the submarkets witnessing
healthy absorption.
Despite a decrease in laden container traffic into Southern California
seaports in the first quarter, due in part to observation of the Chinese
New Year, volume is anticipated to increase in months to come as
imports ease back into a steadier pace. Recent gridlocks and delays
have disrupted the flow of freight across the nation; this is of particular
concern in Los Angeles and Long Beach, which handle more than 40.0
percent of U.S. imports. Speedy resolution to these issues is critical to
prevent a looming port strike and disruption in supply chains, as the
economy is experiencing positive momentum and retailers are gearing
up for peak season ahead.
Leasing activity
South Bay
• Huffy Corporation, a manufacturer and importer of bicycles, inked a
120-month direct lease for 338,899 square feet at 350 Westmont
Avenue in San Pedro.
Vacancy
Rents
Net absorption
Leasing volume
Sales prices
Sales volumes
Construction
deliveries
Arrows represent change from prior quarter
• Crown Crafts Infant Products signed a 72-month renewal for 157,400
square feet at 711 W Walnut Street in Compton.
• Barton Brands, a producer of spirits and liquors, committed to a 117month expansion for 131,289 square feet at 20444 S Reeves Avenue
in Carson.
• Continental Logistics, Inc., a 3PL support solutions provider, signed a
38-month direct lease for 89,630 square feet at 850 W Artesia
Boulevard in Compton.
• EZ Mailing Services, Inc. committed to a 63-month lease for 73,948
square feet at 11099 La Cienega Boulevard in Los Angeles.
• JS International Shipping Corp. inked a 63-month direct lease for
60,667 square feet at 1250 Victoria Street in Carson, an expansion
and relocation from Torrance.
• Uninet Imaging, specializing in office products and supplies,
committed to a 41,600-square-foot renewal for 36 months at 3232 W
El Segundo Boulevard in Hawthorne.
Central
• Pixior, a warehousing, management and distribution company, signed
a 64-month direct lease for 132,642 square feet at 2601 Sequoia Drive
in South Gate.
• E.B. Bradley signed an 89-month direct lease for 77,663 square feet at
5602 Bickett Street in Vernon.
• T&T Foods, Inc. inked a 15- month direct lease for 76,000 square feet
at 4901 S Boyle Avenue in Vernon.
• Fungyun committed to an expansion of 74,586 square feet over a 51month term at 4903 Alexander Street in Los Angeles.
• Flowserve US, a manufacturer and aftermarket service provider of
flow management products and services, signed a 62-month direct
lease for 52,863 square feet at 2705 Leonis Boulevard in Los Angeles.
• NGN New York & Ultra Fabrics, a pioneer in the polyurethane
synthetic leather industry, committed to a 39,836-square-foot direct
lease at 2640 E 26th Street in Vernon for 65 months.
Mid-Counties
• Dynamic Worldwide West, serving the logistics needs of retailers and
consumer product manufacturers, committed to a 24-month direct
lease of 238,270 square feet at 6400 Valley View Street in Buena
Park.
• ACE World Class, Inc., a third party logistics company specializing in
the apparel industry, inked a 61-month direct lease for 161,610 square
feet at 12250 Whittier Boulevard in Whittier.
• Central Garden & Pet signed a 61-month renewal for 115,159 square
feet at 13227 Orden Drive in Santa Fe Springs.
• Suddath Relocation Systems, specializing in professional moving,
logistics and transportation, inked a 60-month renewal for 106,118
square feet at 14221 Artesia Boulevard in La Mirada.
• H Mart Logistics committed to a 120-month direct lease of 87,286
square feet at 8550 Chetle Avenue in Whittier.
• California Furniture Outlet signed a 65-month direct lease for 55,376
square feet at 6400 Artesia Boulevard in Buena Park.
• Triple Play Services, specializing in digital signage, IPTV, video on
demand and mobile device streaming software solutions, committed to
a 60-month direct lease for 27,111 square feet at 13518 Imperial
Highway in Santa Fe Springs.
• The Crane Guys inked a 40-month expansion lease for 15,467 square
feet at 14480 Alondra Boulevard in La Mirada.
San Gabriel Valley
• Cozzia, a leading manufacturer of furniture, committed to a 37-month
direct lease for 72,000 square feet at 14515 E Don Julian Road in City
of Industry.
• Filtrona Plastics inked a 62-month lease for 28,193 square feet at
21301 Ferrero Parkway in City of Industry.
• Yitai Corp, specializing in the production, transportation and sale of
coal, signed a 39-month direct lease of 12,400 square feet at 1309
John Reed Court in City of Industry.
North
• Kelly Paper Company, a producer and seller of commercial printing
products, inked a 38- month renewal for 13,002 square feet at 20800
Lassen Street in Chatsworth.
Tenants in the market
• 99 Cent Only Stores is in the market for 700,000 square feet.
• Pacer is in the market for 500,000 square feet.
• Navy Exchange is in the market for 400,000 square feet.
Sales activity
South Bay
• CenterPoint Properties acquired 187,986 square feet at 100 W Victoria
Street in Long Beach from Xebec Realty Partners for $16.5 million
($88 per square foot). The property was an investment sale and the
building was fully leased at the time of sale.
• Rexford Industrial purchased two properties, totaling 86,550 square
feet, at 1504-1510 W 228th Street in Torrance from SCL Properties
LLC for $6.6 million ($76 per square foot). The portfolio was an
investment sale and the cap rate was reported at 5.9 percent.
Central
• CaIPERS purchased the 400,169-square-foot Randolph Business
Center located at 5959 Randolph Street in Commerce from CIGNA for
$53.8 million ($134 per square foot). The property was a triple net
investment sale, fully leased and the cap rate was reported at 4.3
percent.
• Joia Trading Co. acquired the 148,147-square-foot Stanford Regency
Plaza at 895 E 14th Street in Los Angeles from Xiang Hao Cui for
$31.0 million ($209 per square foot) in an owner-user sale. The
building was fully leased at the time of sale.
Mid-Counties
• Rockman Company (U.S.A), Inc. purchased 52,032 square feet at
12011 Smith Avenue in Santa Fe Springs from Penwood Real Estate
Investment Management for $6.9 million ($132 per square foot). The
buyer is an owner-user and the property was fully leased at the time of
sale.
• Champion Power Equipment acquired 43,432 square feet at 12039
Smith Avenue in Santa Fe Springs from Penwood Real Estate
Management for $6.3 million ($145 per square foot). The building was
almost fully vacant at the time of sale and the buyer will occupy the
space as an owner-user.
San Gabriel Valley
• Goya Foods, Inc. bought 250,000 square feet at 315 S 7th Avenue in
City of Industry from GFI California Realty LLC for $22.8 million ($91
per square foot) in a corporate-user sale. The building was fully leased
at the time of sale.
• Duchen USA LLC purchased 67,878 square feet at 15320 E Salt Lake
Avenue in City of Industry from Goya Foods, Inc. for $7.9 million ($116
per square foot). At the time of sale, the building was fully leased.
North
• Unique Vintage Properties LLC bought 32,236 square feet at 2830
Ontario Street in Burbank from KBC America, Inc. for $6.0 million
($186 per square foot) in an owner-user sale. At the time of sale, the
building, a part of Howard Business Park, was fully leased.
• Applied Minds LLC purchased 39,294 square feet at 814-820 S
Mariposa Street in Burbank for $5.1 million ($130 per square foot).
The property was fully leased at the time of sale and the buyer will
occupy the space as an owner-user.
Construction activity
• Sixteen projects totaling 1.5 million square feet are under construction
throughout the Los Angeles industrial market. These projects range in
size from 33,428 to 617,500 square feet. The majority of this activity is
based in the Central and San Gabriel Valley submarkets, with
developers such as KTR Capital Partners, Seventh Street
Development and Dedeaux Properties leading construction activity.
• Of new development underway, there is only one warehouse in excess
of 500,000 square feet, a rare opportunity for a tenant to occupy big
box, modern space in a port-near submarket.
• Looking forward, development will likely pause to balance construction
with demand. Alternatively, developers may choose to strategically
rehabilitate well-located older assets.
For more information, please contact:
Melineh Soukiasian
Research Analyst
Los Angeles
+1 (213) 239 6266
Melineh.Soukiasian@am.jll.com
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