Market holds steady as activity at major project buoys quarter. (Real Estate Quarterly--Mid-Cities).

BUYING and leasing activity remained strong for Mid-Cities industrial properties that occupy a swath of L.A. County stretching southward and eastward from Vernon.

The rate of first quarter activity kept pace with that of the previous three months, fueled by a large Pico Rivera industrial park coming online, historically low interest rates and lower asking prices from sellers.

Vacancy rates fell to 4.1 percent in the first quarter from 4.8 percent in the previous three months, while sales and leasing activity held steady at 1.8 million square feet, according to Grubb & Ellis Co. Those levels are solidly higher than the 1.4 million posted square feet sold or leased in the first quarter of 2002.

"It was a surprisingly strong showing," said John Biven, a real estate broker with Insignia/ESG. "For over a year the market has been weak for spaces over 45,000 square feet, so I was surprised to see that much activity reported."

Compared with the preceding three months, asking prices from January to March fell a penny per square foot, to 49 cents per square foot on average. They remain 1 cent higher than in the first quarter of 2002.

Much of the quarter's sales activity occurred at the Pico Rivera Commerce Center, where Laguna Beach developer Sares-Regis Group is putting together a 10-building, 2 million square foot industrial project on the former Northrop Grumman Corp. site on Rex Road, between Rosemead and Paramount boulevards.

Nearly 1.5 million square feet of the complex, which is still predominantly under construction, has already been leased or sold, said John Privett, a CB Richard Ellis senior vice-president.

Technology company Iron Mountain leased a 244,754 square foot warehouse for its file-storage business. The 10-year lease is estimated to be worth nearly $12 million. GRM, another document storage company, leased 170,371 square feet in a 10-year contract worth $9 million.

Steel manufacturer Allegheny Ludlum, paper manufacturer Boise Cascade Corp. and office equipment storage company Door-to-Door Storage have signed leases for a combined 244,780 square feet worth an estimated $241,000 a year.

"For a market that has been relatively quiet, these are some pretty big deals," Privett said.

Several large deals at the complex are being held in escrow until the construction of the new buildings is complete, Privett said.

The Los Angeles Unified School District is in escrow on a 391,250 square foot warehouse. Though the price was not released, the market rate of the building is $32.3 million.

Furniture importer AICO is in escrow on a 303,878 square-foot warehouse at the complex worth $25.9 million at market rate. Automotive parts distributor Parts Channel is in escrow as well on a 99,610 square foot warehouse worth $8.2 million at market rate.

Outside of the Pico Rivera complex, the biggest deal of the period was for a 254,000 square-foot warehouse at 15300 Desman Road in La Mirada. The building was sold by Dalton, Ga.-based Beaulieu of America for $16 million to Boston-based TA Associates Realty Group LLC, which will lease the space for five years before taking possession.

Commercial deals tend to be rare in the Mid-Cities, where activity is dominated by the industrial side, and the first quarter of 2003 proved to he no different.

Even though the Cerritos Towne Center -- an eight-story commercial building with 165,000 square feet of space -- came on line in November, only 15 percent of the building is leased, according to Tom Irish, president of Transpacific Development Co.

The largest tenant to sign at the building in the first quarter was Aspen Education Group, which inked a eight-year deal for 16,000 square feet worth nearly $3.5 million. Mortgage lender Pacific Republic leased 6,500 square feet in a five-year deal worth $877,500.

Construction is near completion and leasing about to begin at 11020-11320 Bloomfield Ave. in Santa Fe Springs, developed by Sares-Regis. The 455,000 square foot campus consists of three buildings from 84,000 square feet to 240,000 square feet.

RELATED ARTICLE: Major Events:

* Beaulieu of America sold a 254,000-square-foot warehouse at 15300 Desman Road in La Mirada for $16 million to Boston-based TA Associates Realty Group, which will lease the space for five years before taking possession.

* Iron Mountain leased a 244,754 square foot warehouse in Pico Rivera for its file-storage business. The 10-year lease is estimated to be worth nearly $12 million.

* Allegheny Ludlum, Boise Cascade Corp. and office equipment storage company Door-to-Door Storage signed leases for 244,780 square feet in the Pico Rivera Commerce Center. Combined, the deals are worth an estimated $241,000 a year.

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