Developer Finding Niche for Small Industrial Spaces.

As the industrial market has boomed in the San Gabriel Valley, so has construction of big-box warehouse and distribution facilities, leaving smaller entrepreneurs with few options.

The vacancy factor for buildings under 50,000 square feet stands at only 4.5 percent. So two San Gabriel Valley projects currently under way, in Pomona and La Puente, are targeting that niche.

"If you look for quality 15,000- to 40,000-square-foot space with reasonable clear heights, it's slim pickings," said David Prior, president of the Klabin Co., noting the phenomenon is true throughout the L.A. area. "It's a niche being ignored by major developers. (Developing smaller spaces) is something that has to be (done) by local entrepreneurial developers. Not everyone needs or wants large spaces."

As a result, Burke Real Estate Group of Santa Ana last week purchased a 10-acre site in the 2200 block of Pomona Boulevard, where it plans to break ground this week on a $13.5 million industrial project, said Chris Bonney of Lee & Associates.

The site was previously occupied by General Dynamics, which was Pomona's largest employer before it moved away about four years ago, Bonney said. The Department of Defense, which owned the property, turned it over to the city of Pomona, which in turn sold it in several pieces.

Burke plans to develop 10 freestanding buildings there, ranging in size from 10,000 to 30,000 square feet for a total building area of 190,000 square feet.

The property is separate from the actual General Dynamics facility, which was sold to furniture manufacturers Boyd Furniture and Tech Systems Group, said Bonney, who along with Steve Shatafian represented Burke.

Burke's proposed buildings will target smaller warehousing operations and manufacturers, including import-export operations and tech companies prevalent in the eastern San Gabriel Valley. A nine-building project in La Puente that Burke is completing has already sold out.

"They do see that as a niche that isn't being properly served," Bonney said. "The larger companies you read about expanding are just one component of the market. A lot of smaller companies just below the radar screen are experiencing growth and need space too."

Lewis Co. is also tapping the market for smaller, user-owned buildings, with a $12.5 million project consisting of eight R&D, flex industrial buildings in La Puente. Lewis acquired the site on Valley Boulevard from General Telephone last year, said company President John Lewis.

"It's an entrepreneurial market because of the Asian predominance in the area and also a lot of R&D, which generally starts in smaller buildings," Lewis said.

Both the Burke and Lewis buildings will be available for sale, because a lot of the Chinese-owned businesses in the area prefer to own their own buildings. "They're seeing rents escalate and they want to protect themselves," Bonney said.