industrial market report 1st quarter 20143 \\ central-los angeles • mid-counties 1st quarter 2014...

$: INDUSTRIAL MARKET REPORT 1st Quarter 20143 \\ CENTRAL-LOS ANGELES • MID-COUNTIES 1ST QUARTER 2014 Contrary to the spate of pundits who, because of declining or steadying prices in$
INDUSTRIAL MARKET REPORT

1st Quarter 2014Central Los Angeles • Mid-Counties

LOCAL EXPERTISE. NATIONAL REACH. WORLD CLASS.

MISSION STATEMENT

Lee & Associates® Group of Companiesis dedicated to continuing its leadership role in the commercial real estate marketplace. These companies provide comprehensive and quality representation to clients, locally and nationally, in a proactive and responsive manner,

integrating the highest level of information, support, professionalism, and integrity. Our core philosophy of creating an organization of companies each independently owned by active commercial real estate agents now

translates into the largest agent-owned commercial real estate organization in America.

WWW.LEE-ASSOCIATES.COM \\ INDUSTRIAL MARKET REPORT

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CENTRAL-LOS ANGELES • MID-COUNTIES

1ST QUARTER 2014

Contrary to the spate of pundits who, because of declining or steadying prices in the residential market, anticipated an immediate slowdown in commercial real estate, the sector remained strong and resilient in terms of leasing and sales activity in Q1. For example, Lee & Associates brokered sales transactions with values ranging from $4.1 to $24M in Q1: between OMP Enterprises, Inc. and Menlo Business Park LLC ($24,076,597.08), Rock Hill Holdings, LLC and Greenwich Village Co ($19,000,000), Harmony Investments LLC and Atlas LA 4th St LLC ($19,000,000), and between the Bandini Group, LLC and Waterbury Investments ($4,197,245). These notable industries sales transactions occurred in the Central Los Angeles Market.

What is remarkable about all this activity,

sales and otherwise, is that it is occurring in a market with very challenging inventories and vacancy rates. The level of activity evidences the creativity and industriousness of Lee & Associates brokers as well the continued interest and enthusiasm of capital markets,

products. Indeed, demand for industrial products are not circumscribed to products of the class A variety but range over to classes B and C as well. Consequently, and even though lending requirements have not relaxed and many transaction are still on an all-cash basis, banks have aggressively returned to the industrial sector. Rates are very low and loan to value ratios are increasing. So much so, that it is ok for a bank, without SBA inducements, to be willing to “do an 80% LTV on owner occupied purchases.” This trend

of giving preferred status to owner occupied purchases is true not only of banks but of life insurance companies as well. It is not

as low as 4.0%.

The Mid-Counties and Central-Los Angles maintained their status as the strongest markets nationally. Relative to Q4 2013, both markets had similar trends with respect to both vacancy and availability: all increasing. That is, compared to Q4, both the Mid Counties and Central-LA markets saw increasing rates of vacancy, albeit only slightly in the latter, from 5.08% to 5.92% for the Mid-Counties and from 3.99% to 4.01% for a Central-LA, and increasing rates of availability—from 8.93% to 9.95% for the Mid-Counties and from 7.33% to 7.93% for Central-Los Angeles.


LEE & ASSOCIATES \\ INDUSTRIAL MARKET REPORT

CENTRALLOS ANGELES

MIDCOUNTIES

ABSORPTION

VACANCY

AVAILABILITY

281,108,228 BASE (SF) 114,272,258

4.12 VACANCY (%) 5.82

7.82 AVAILABILITY (%) 10.03

244,758 SALE ACTIVITY (SF) 244,758

1,850,641 LEASE ACTIVITY (SF) 1,850,641

Market Snapshot

Q2-13 Q3-13 Q4-13 Q1-14

Downtown LA 0.54 0.56 0.57 0.57

Commerce Area 0.48 0.42 0.49 0.46

Vernon Area 0.48 0.45 0.47 0.45

Mid-Counties 0.46 0.53 0.6 0.58

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Q2-13 Q3-13 Q4-13 Q1-14

Avg Lease Rates

Downtown LA Commerce Area Vernon Area Mid Counties

AVERAGE LEASE RATES

GR

OS

S/S

F

Q2-13 Q3-13 Q4-13 Q1-14

Downtown LA 4.98 4.64 3.93 3.69

Commerce Area 4.22 4.18 3.92 3.96

Vernon Area 4.08 4.06 3.73 3.89

Mid-Counties 7.42 6.78 6.45 6.25

012345678

Q2-13 Q3-13 Q4-13 Q1-14

Vacancy Rates

Downtown LA Commerce Area Vernon Area Mid Counties

VACANCY RATES

% V

AC

AN

T

AVAILABILITY RATE: The percentage of all space being marketed for sale or lease at a period of time in a given area.

VACANCY RATE: The percentage of all unoccupied space being marketed for sale or lease at a period of time in a given area.

GROSS LEASE (GRS): A lease agreement in which the stated rent being paid to the landlord includes property taxes and property insurance.

GROSS ABSORPTION: Total number of properties leased or sold for occupancy at a period of time in a given area.

TRIPLE NET LEASE (NNN): A lease agreement whereby the tenant is obligated to pay for all the operating expenses, i.e. property taxes, property insurance, and facility maintenance.

BASE SF: Square footage of existing and under construction industrial buildings.

BASE SFAVAILABILITY

RATE (%)VACANCY RATE (%)

Commerce 50,257,198

Los Angeles 131,384,968

Montebello 11,218,822

Pico Rivera 10,299,455

Vernon 57,354,489

SELECT STATS (10K AND UP) SELECT STATS (10K AND UP) SELECT STATS (10K AND UP)CENTRAL SAN GABRIEL VALLEYMID-COUNTIES

Vacancy vs Availability

TERM

INO

LOG

Y

BASE SFAVAILABILITY


Buena Park 13,933,782

Cerritos 12,863,680

La Mirada 12,352,490

Norwalk 3,237,729

Santa Fe Springs 50,593,435

BASE SFAVAILABILITY


Azusa 5,155,274

Baldwin Park 3,620,147

Covina 2,126,591

Diamond Bar 125,040

Duarte 1,192,547

El Monte 7,843,833

Industry 77,791,995

Irwindale 10,934,649

Monrovia 2,830,923

Pomona 16,210,181

South El Monte 7,547,558

Walnut 3,672,219



307,969 SF LEASED5800 SHEILA ST COMMERCE

Jack Cline represented the lessor Pacer International, in this lease transaction

123,600 SF SOLDTotal Consideration: $19,000,000

963 E 4TH ST LOS ANGELES

Mollie Dietsch and Matthew Artukovich represented the buyer Atlas LA 4th Street LLC, in this sale transaction

AvailabilitiesVisit us at www.lee-associates.com to see our complete list of available properties

30,000 SF SOLDTotal Consideration: $1,300,000

1319 W 14TH ST LONG BEACH

Jeff Bethel represented the seller Licciardi Investments LP, in this lease transaction

103,401 SF LEASED7433 TELEGRAPH RD MONTEBELLO

Peter Bacci and Mike Tsaparian represented the lessor Bonorris Family Trust, in this sale transaction.

CompletedTransactions

FOR SALEAddress Available SF Listing Agent

1925-4671 Worth St, Los Angeles 320,000 SF D. Brandt

1846 E. Gage Ave, Los Angeles 172,702 SF M. Smith

6009-6041 Malt Ave, Commerce 140,509 SF J. Bethel

12029 Regentview Ave, Downey 89,760 SF D. Cline

114-2123 W 21st St, Los Angeles 85,264 SF H. Mirzoyan

656 S. Vail Ave, Montebello 44,050 SF M. Artukovich

623-627 S. Los Angeles St, Los Angeles 37,000 SF A. Artukovich

2920 Tanager Ave, Commerce 33,417 SF P. Bacci

2851 Lynwood Rd, Lynwood 30,945 SF T. Naples

925 S. Hooper Ave, Los Angeles 21,420 SF J. Rinkov

FOR LEASEAddress Available SF Listing Agent

4100 Ardmore Ave, South Gate 156,640 SF J. Cline

6009 Malt Ave, Commerce 140,509 SF J. Bethel

2011 N. Soto St, Los Angeles 126,000 SF M. Smith

2726 Fruitland Ave, Vernon 104,110 SF J. Halferty

2400 Yates Ave, Commerce 92,032 SF A. Artukovich

9935 Beverly Blvd 2, Pico Rivera 91,616 SF P. Bacci

7959 S. Paramount Blvd, Pico Rivera 53,371 SF J. Hubbard

6901 S. Alameda St, Huntington Park 36,561 SF D. Brandt

8611 Otis St, South Gate 22,195 SF C. Campbell

5812 E. Washington Blvd, Commerce 20,000 SF T. O'Loughlin



02,0004,0006,0008,000

10,00012,00014,00016,00018,000

2009 2010 2011 2012 2013 2014

Dow Jones Ind. Avg.

4

5

6

7

8

9

10

11

12

2009 2010 2011 2012 2013 2014

US Unemployment Rate

DOW JONES INDUSTRIAL AVERAGE

U.S. EMPLOYMENT RATE

* Data through 1st Quarter 2014

Lease And Sale Activity LEASESALE

2009 10,428

2010 11,577

2011 12,217

2012 13,105

2013 16,576

2014 16,457

40.00

50.00

60.00

70.00

80.00

90.00

100.00

110.00

120.00

2009 2010 2011 2012 2013 2014

Crude Oil Prices (usd/bbl)

CRUDE OIL PRICES (USD/BBL)

2009 79.36

2010 91.38

2011 98.83

2012 101.17

2013 98.87

2014 101.40

1

1.5

2

2.5

3

3.5

4

4.5

2009 2010 2011 2012 2013 2014

U.S. 10 yr Treasury Rates

U.S. 10 YR TREASURY RATES

2009 3.85

2010 3.3

2011 2.57

2012 1.78

2013 3.04

2014 2.69

2009 7.30

2010 9.90

2011 9.40

2012 8.50

2013 7.80

2014 7.30

Economic Indicators

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

2010 2011 2012 2013 2014*

Downtown LA

Lease (SF) Sale (SF)

2010 2011 2012 2013 2014*

3,607,114 3,495,911 3,056,517 2,735,055 359,086

2,942,333 2,195,991 3,755,925 4,734,630 531,914

DOWNTOWN LA

0

1,000,000

2,000,000

3,000,000

4,000,000

2010 2011 2012 2013 2014

Vernon Area


2010 2011 2012 2013 2014

2,318,983 2,153,084 2,861,196 2,048,101 189,097

1,801,821 1,861,681 1,566,863 721,069 7,965

VERNON AREA

0

2,000,000

4,000,000

6,000,000

2010 2011 2012 2013 2014

Commerce Area


2010 2011 2012 2013 2014*

2,739,503 5,114,133 3,761,428 3,038,990 723,655

519,770 637,064 2,010,977 1,513,313 444,270

COMMERCE AREA

0

2,000,000

4,000,000

6,000,000

8,000,000

2010 2011 2012 2013 2014*

Mid-Counties


2010 2011 2012 2013 2014

4,565,801 6,129,440 4,859,427 7,092,911 1,850,641

1,480,845 2,502,885 2,444,940 2,201,208 244,758

MID-COUNTIES

SF

SF

SF

SF

101

5210

110 710

210605

405

4051

1

91

5522

57

60

30

39134 2

27 2 1

5

10 10

15Long Beach

Norwalk

La Mirada

SantaFe Springs

Vernon

Downtown LA

El Monte

Pomona

N

P

ac i f i c O

c e a n

Central LA

Mid-Counties

San Gabriel Valley

Office Locations

DuarteBurbank

Hollywood

InglewoodHuntington

Park

TorranceBrea

HaciendaHeights

Glendora

RanchoCucamonga

Claremont

Ontario

Diamond Bar

COMMERCEINDUSTRY

MARKET MAP

LEE & ASSOCIATES® LOCATIONS

CALIFORNIA Anaheim, Antelope Valley, Calabasas, Carlsbad, City of Industry, City of Commerce, Irvine, Long Beach, Los Angeles, Murrieta, Newport Beach, Oakland, Ontario, Orange, Palmdale, Palm Desert, Pleasanton, Riverside, San Diego, San Luis Obispo, Santa Barbara, Santa Maria, Santa Monica, Sherman Oaks, Stockton, Temecula, Victorville

OTHER LOCATIONS MO; Las Vegas, NV; Reno, NV; Edison, NJ; Little Falls, NJ; Manhattan, NY; Dallas, TX; Madison, WI; Charleston, SC; Greenville, SC; Kansas City, KS; Greenwood, IN; Indianapolis, IN; Atlanta, GA

INDUSTRY

Travis Allan

Jeff Bethel

Patrick Bogan

Chris Bonney

Michael Brent

Kevin Ching

Steve Coulter

Marc DiGennaro

Adam Dzierzynski

Kent Ebinger

John Espinosa

Henry Hong

Jeff Huberman

Scott Kroman

Chris Larimore

Michael Lee

Stacy Martin

Vincent Molitor

Tai Ngo

Jason Woods

LEE & ASSOCIATES® - INDUSTRY 13181 Crossroads Pkwy NorthSuite 300City of Industry, CA 91746P: 562.699.7500 F: 562.695.3133Corporate ID# 01125429

The information contained herein has been furnished from sources which we deem reliable, but for which we assume no

for use by Lee & Associates clients and professionals and all right to the material are reserved and cannot be reproduced without prior written permission of Lee & Associates®.

COMMERCE

Anita Artukovich

Matt Artukovich

Peter Bacci

David Brandt

Chuck Campbell

Doug Cline

Jack Cline

Tim Cronin

Mollie Shea Dietsch

Jim Halferty

Jeff Hubbard

Armen Kazaryan

Jim Kinetz

Edward Lee

Hovik Mirzoyan

Tony Naples

Tom O’Loughlin

Craig Phillips

Jeffrey Rinkov

Mike Smith

Michael Tsaparian

Leo Vusich

Tim Wetzel

Ron Young

LEE & ASSOCIATES® - COMMERCE500 Citadel DriveSuite 140City of Commerce, CA 90040P: 323.720.8484 F: 323.720.8474Corporate ID# 01125429

Agents

www.lee-associates.com

LOCAL EXPERTISE. NATIONAL REACH. WORLD CLASS.

industrial market report 1st quarter 20143 \\ central-los angeles • mid-counties 1st quarter 2014...

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