Lease Prices Up as Demand For Industrial Space Soars.

As available land and property disappears throughout the rest of the region, demand for industrial space in the Mid-Cities keeps climbing.

A total of 2.8 million square feet was sold or leased in the fourth quarter, pushing total activity for 1999 to 10 million square feet.

In addition, more than 4 million square feet of new space came on line in 1999, making Mid-Cities a development hotspot.

With demand high, lease prices crept up to an average of 46 cents per square foot a month in the fourth quarter, from 44 cents in the previous period. Meanwhile, the vacancy rate dropped to 3.8 percent in the October-December period from 4 percent in the third quarter, according to Cushman & Wakefield Inc.

A major piece of industrial property changed hands in December when Voit Development Co. acquired 2 million square feet of industrial parks and buildings from Fuijita Corp. for $125 million. The portfolio, mainly in the Mid-Cities area, consists of eight business parks totaling 800,000 square feet and 23 industrial buildings totaling 1.2 million square feet.

Santa Fe Springs remained an active market. In a transaction worth more than $30 million, DSL Transportation Services signed a 10-year lease for 608,220 square feet at the former Fedco building. The property will serve as a distribution warehouse.

"I think this is one of the largest industrial deals during the whole last year," says Stephen Batcheller, first vice president of industrial properties with CB Richard Ellis Inc. "A walk around the perimeter of the property is about a mile long."

CB Richard Ellis and Seeley Co. represented the landlord, Alamo Group, in the transaction.

The property never went on the open market - what appears to be a growing trend in the Mid-Cities. "It came through word of mouth and got pre-leased," Batcheller says.

Also in Santa Fe Springs, Golden Springs Development Co. completed the first phase of its 265-acre Golden Springs Business Park. Seeley Co. has already executed leases for more than 1 million square feet of that space.

Copper & Brass leased 151,351 square feet for five years. The firm will use the space for distribution of specialty metals. North American Van Lines leased 214,888 square feet for 120 months, while plastics manufacturer Contico International took 123,120 square feet for 60 months.

A new building totaling 284,000 square feet was completed in the fourth quarter, and a 236,000-square-foot facility will be completed within a month.

"Right now, we are negotiating on 140,000 square feet of the completed building and have interest in other units of both buildings," says Steve Calhoun, senior vice president at Seeley.

Meanwhile, development of Heritage Springs Business Park - a 10-building, 550,000-square-foot project - will begin this month. Originally scheduled to break ground last quarter, the project is getting interest from possible tenants.

"We have deals pending for a number of buildings and expect a significant amount of pre-leasing," says Tim Howard, vice president of Trammel Crow Co.

In other fourth-quarter deals in Santa Fe Springs, Shaw Industries signed a 10-year lease for 306,286 square feet; Coaster Co. inked a 62-month lease for 142,290 square feet; and Philips Industries Inc. entered a five-year lease for 127,426 square feet.

Other areas of the Mid-Cities saw a number of sales. The county Board of Education bought the 215,000-square-foot Boeing building in Downey from the O'Donnell Group for $21 million.

Meanwhile, Fu-Lyons Associates, based in Paramount, sold all 12 buildings comprising the Fu-Lyons Downey Business Park for more than $13 million. Stockton Westland Partners bought 10 of the buildings, while two investors - Pasadena Winter Gardens and the Wong family - purchased the other two.

In leasing activity, Barcana, which sells artificial Christmas trees, rented 87,000 square feet in Whittier for five years from Pacific Gulf Properties, a real estate investment trust.

Mid-Cities

Major Events:

* In a transaction worth over $30 million, DSL Transportation Services signed a 10-year lease for 608,220 square feet in Santa Fe Springs.

* Voit Development Co. acquired 2 million square feet of industrial parks and buildings from Fuijita Corp. for $125 million. The portfolio consists of eight business parks and 23 buildings.

* Golden Springs Development Co. completed the first phase of its 265-acre business park. Seeley Co. has already executed leases for more than 1 million square feet. North American Van Lines leased 214,888 square feet.

* The county Board of Education bought the 215,000-square-foot Boeing building in Downey from the O'Donnell Group for $21 million.