Back to Local Markets

WHERE THE ACTION IS

 

Perhaps I should qualify. Where there is action, it’s on the local level. Now that plentiful financing has been squeezed from the market, there is no more room for mega projects, program development, or new concepts. It’s back to basics and that means individual businesses and landlords dealing with their own unique decisions. Loans are available through SBA programs but limited to business expansions. Local banks that were not burned by sub-prime also have resources for conservative lending. The land side is virtually dead for development except under the most risk averse situations. There is however considerable activity in securing tenants for build-to-suit, but locating sites is still a challenge.

On the street, activity is at a crawl. Aircraft and defense is a bright spot but from much reduced levels as compared to the past. Warehouse and shipping is only moderate. Apparel and furniture have fallen from their once lofty highs. Business in other industrial sectors is just plain spotty.

So far, this is a much different recession than the past. There are not a lot of empty buildings languishing for months on end that sell for rock bottom prices. Very little exists in the way of bank owned property. And pricing is still holding up. Hopefully, it’s indicative of a second half rebound.

Outside of traditional farm brokerage, plant closings, bankruptcy sales, and Brownfield land sites are where bargains can be found. These large properties are scattered throughout the region and fall under the purview of professionals who have been monitoring these properties for years. It’s still an exciting part of the business although many potential buyers are now on the sidelines until financing sources return. Periods like this are great for developing new relationships.

BY THE NUMBERS

Industrial rents range from a low of $.50 Gross to a high of a $1.00. This is the widest range I have seen in 25 years. The disparity is due to older buildings that are still in original hands compared to new developments that fully incorporate high building, land, tax and operating costs. Tenants fall equally on both sides of the divide. Some will work hard to make the older buildings functional. Others will work with high production volumes to afford the new developments.

On the sale side, prices run from $100 to $140 per square foot. And much higher in the new industrial condo projects. Surprisingly, prices are not correlated by age or condition, but by availability and opportunity. This condition is reflective of the volatility and financing dysfunction we are currently experiencing.

Availability is still low. Out of 1400 buildings in greater Gardena, only 55 are on the market. Transaction levels are down. Subleases are rising. Other interesting trends that skew conditions include continued high demand by Asian buyers enjoying currency exchange advantages; displaced property owners from LAUSD eminent domain proceedings armed with generous tax free trade money; and low interest rates for those with a bullet proof credit story.

While general business sentiment is muted, it’s not so obvious when looking at the numbers.

 

GARDENA NOODLES

 

Gardena’s Japanese heritage has given us some of the best noodle shops anywhere. These are a few:

Sanuki no Sato has a great Nabeyaki.

Otafuku is famous for its hand made buckwheat soba noodle.

Kotohira also makes its delicious white udon by hand.

Marukai Market has a food court that can satisfy everyone’s different tastes, including a delicious fried ramen.

Spoon House is very eclectic that matches the best of Japanese and Italian noodles.

Next letter, Sushi….

Note picture at top is for the Avalon Distribution Center, now under construction. Sizes are 5,000 sf to 7,500 sf. Each unit has 2 docks, 24′ clr, and sprinklered. Excellent small distribution units. At Rosecrans and Avalon .

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