Mid-Counties Facing Crunch From Lack of Space

The first quarter saw strong activity throughout the Mid-Counties industrial market, which consists of industrial buildings in the cities of Buena Park, La Palma, Los Alamitos, Cypress, Cerritos, La Mirada, Santa Fe Springs, Artesia, Bellflower, Downey, Lakewood, Norwalk, Paramount and Whittier.

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In addition, there was an increase in port activity from Asia and experts predict a continued growth in container velocity indefinitely. Last year, the ports of Long Beach and Los Angeles received a record number of containers coming from Asia alone.

Availability continued on a downward spiral to 4.3% in the first quarter from 4.7% in fourth quarter, while vacancy decreased to 1.5% from 1.8%.

With a lack of space, tenants are struggling to find facilities and thus find themselves competing with multiple users for the same space. That has brought an increase in lease renewals for many landlords. As a result, landlords find themselves in a favorable position to increase rents. Overall, lease rates have increased about 10% annually in the past several years.

What can we expect for the Mid-Counties market?

In the leasing market, the 10,000- to 30,000-square-foot segment will continue to enjoy the greatest activity. About 65% of all transactions year to date have occurred from leases and sales in the 10,000- to 30,000-square-foot range.

While the velocity of transactions is less, prospects for buildings of 50,000 square feet and greater will continue to have limited options due to the lack of supply. Several larger leases are under negotiation. Some already have been consummated early in the second quarter, further brightening prospects for the balance of the year.

The Mid-Counties market continues to be the first choice of many users because of its central location, modern, functional industrial base and its clean, safe environment and proximity to the ports.