Industrial shift leaves Tri-Cities warehouse, manufacturing sectors in space transition.

The industrial-warehouse markets of Pasadena, Glendale and Burbank are in transition, as old industry moves out, and property is re-cycled into newer uses -- in something of mirror image of the same process that swept over the Westside of Los Angeles in the past several decades.

Moving out of Burbank are Lockheed, on 300 acres, Weber Aircraft, on 15 acres, and Zero Corp., a luggage manufacturer.

Virtually all the land vacated will be converted into something other than manufacturing space.

Nevertheless, there is still a solid demand for industrial and warehouse space in the Tri-Cities area, among higher-end users who have a need to be close to the entertainment industry, or to downtown office markets.

"We are seeing higher-end users, such as Disney, which occupies about 40 percent to 50 percent of the Grand Central Business Centre (office-industrial park) in Glendale, and other entertainment industry firms, taking space in Glendale and Burbank," said Greg Barsamian, senior marketing consultant with Grubb & Ellis, in that brokerage firm's Los Angeles North office.

Grand Central has a total of about 1.8 million square feet of industrial and office space, in 69 buildings, on 100 acres of land.

The entertainment industry, for all of its glamour, requires much mundane pre- and post-production work, such as the manufacturing of sets or the developing of film. Too, special effects outfits like to be located near the action.

Other industrial-warehouse space is coming to be occupied by service industries that need to be close to office markets, such as office supply companies -- businesses that stock paper, desks, and other items used in the Glendale or downtown Los Angeles office centers, said Barsamian.

Also many printing shops have moved into the Glendale region to serve local publications or office patrons who need pamphlets or other literature done, said Barsamian.

Because the supply of industrial-warehouse space is limited, lease rates have been holding up fairly well in the Tri-Cities area, said David Powell, senior sales associate with Hayes & Co. in Pasadena. "We have leases in 80 cents (per square foot, a month) range, even up to $1-a-square-foot in Pasadena, for your smaller spaces in a multi-tenant building."

Said Barsamian, "A lot of the market is around 70 cents a square foot, in the Grand Central the going rate is 85 cents a square foot. The lowest price is on metal-type buildings, the 'Butler' buildings, maybe at 40 cents a square foot. However, there are not a lot of vacancies in the area."

So-called free rent, so common in the Inland Empire and South Bay markets, is not a big feature of the Tri-Cities area, when it comes to industrial-warehouse space. "You might get 30 to 60 days free rent on a five-year lease," said Barsamian. In contrast, in the Inland Empire and the South Bay, some larger buildings are offering six months free rent on a five-year lease in order to attract tenants.

The Tri-Cities region is not where one finds large spaces, of the sort found in the Inland Empire, Ventura County, the City of Industry or the South Bay, all of which boast 400,000-square-foot and up buildings. "Right now, there are no buildings with 40,000 square feet for lease in Burbank, Glendale or Pasadena," said Barsamian. Added Powell, "Pasadena does not have any big boxes. We have multi-tenant, research and development. The (Tri-Cities) area is not a major distribution region, such as the Inland Empire."

One reason why the industrial-warehouse space future of the region is limited is the price of industrial land -- about $40 a square foot, eight to 10 times the going rate in less-crowded sections of California, such as the Inland Empire.

Nevertheless, some inventiveness has been put into a new industrial building on San Fernando Road in Glendale, which has two stories -- a throwback to the days when multi-story industrial buildings were common, said Barsamian.

"Lowe Development built the two-story industrial building, which has a truck ramp up to the top floor. There are 40,000 square feet on the bottom floor, and 20,000 square feet on the top floor."

Will the multi-story industrial building make a comeback, as Southern California becomes more congested? "I don't think so," said Barsamian. "There are only certain kinds of users for this space. A large truck cannot get up to the upper floor. But it is an interesting building, and an interesting attempt to use land in a close-in area."

The preferred buildings in the industrial-warehouse market today are very large, single story buildings with 30-foot high ceilings and doors. Modern stacking methods allow the piling up of products almost to the ceiling, and other modern warehouse methods, such as dollies attached to in-warehouse rails.

The capital improvements allow the use of less labor, while multi-story buildings, with shallow ceilings, and freight elevators, require relatively more labor. Too, older buildings often do not have the kind of truck access that new buildings, with wide driveways, have. In modern warehousing, it is important to allow large, 18-wheeler trucks easy access to "dock-height" unloading bays -- such bays allow goods to be rolled straight off the truck into the warehouse.

Older industrial areas -- such as the Tri-Cities market -- simply can't compete against the new buildings for some types of customers. But often, because of location, older, close-in industrial land becomes a much-desired commodity for other "higher-end" users who need to be close to customers.