One company's long search for a site to allow expansion.

When Pacific Oil Coolers decided to bring the operations of an Ohio company it had purchased into its San Gabriel Valley facility, owner Paul Saurenman figured it would take just a short time to find new industrial space.

But the search ended up taking 15 agonizing months, as he scoured sites across the region and saw two deals collapse before finally closing on a property in La Verne--near the county line and at full asking price.

This month, more than a year later than originally planned, the supplier is finally moving to California.

"This was a two-year ordeal for me," Saurenman said.

Pacific Oil Cooler's difficulties in finding industrial space vividly illustrate how tight the region's industrial market has become. With industrial vacancy rates in the low single-digits throughout most of L.A. County, virtually all the quality buildings have already been snapped up, making it difficult, if not impossible, to find space.

"You have to look long and hard to find a gem in this marketplace," said John Hollingsworth, managing director of the Central Los Angeles office for CB Richard Ellis and Pacific Oil Cooler's broker.

Saurenman's saga began seven years ago when he purchased a bankrupt Ohio company that his firm had represented as a distributor. Like Pacific Oil Coolers, then based in South El Monte, Aero-Classics made engine cooling products, primarily for aircraft.

By the end of 2004, Saurenmen decided it was time to move Aero-Classics out to Southern California. At first, he wanted to find a separate place near his South El Monte facility. But after a careful review of the numbers, he decided to have all the operations under one roof, which meant looking for a larger 40,000-square-foot space.

Long shot

Because he lived in Pasadena, his son lived in La Verne and most of the 100 employees lived in the San Gabriel Valley, Saurenman decided to limit his search to that region.

After six weeks, Saurenman found an ideal building in Azusa. Trouble was, Verizon Communications Inc. got there first, had already placed a bid on the building and was in escrow. "I knew it was a long-shot, but I decided to place a higher backup offer on the building," Saurenman said.

The next month proved a "nail-biter," as Verizon was awaiting approvals for a conditional use permit from the city. Finally, in late March, Verizon closed escrow. "We were back to square one," Saurenman said.

Just weeks later, he found another site that appeared to be ideal in Irwindale. Pacific Oil Coolers put an immediate bid on the building, but while in escrow Saurenman found out that the property was part of a larger parcel once owned by Aerojet (now a subsidiary of GenCorp Co.) and was contaminated.

Saurenman initially thought he would be indemnified against the contamination, but as the escrow progressed, Hollingsworth said the lender expressed concerns that Pacific Oil Coolers could be held liable too. Worse, if he wanted the building, Saurenman would have to pay market price, with no discount for potential liabilities.

So, in April 2005, Pacific Oil Coolers dropped out of escrow. "Again, we were back to square one," Saurenman said.

Pacific Oil Coolers bad another problem: The lease was running out on Aero-Classic's facility in Ohio. So, Saurenman negotiated a costly one-year lease extension that he had not anticipated.

Saurenman thought that had at least brought him some breathing room, but that was before he started his site search again. "We kept looking and looking and looking. There were buildings out there, but they were junk and the sellers were asking for a lot of money," Saurenman said.

With the market so tight, Saurenman figured out that owners of marginal industrial buildings decided the time was right to put properties on the market that otherwise would have no prospect of getting bought.

"There was one building that had rusted corrugated steel, another building that resembled a drive-in theater with only two electrical outlets in the entire building and another one that had 30 bums living in back of the building," Saurenman recalled. "It was very disheartening."

Holiday travels

He and his family even spent New Year's weekend a year ago looking at buildings from El Monte to Ontario. Again, they came up empty and Saurenman was forced to negotiate yet another one-year extension on the Ohio lease.

But then, CB's Hollingsworth let Saurenman know about a 40,000-square-foot building that had come on the market in La Verne, just west of the L.A. County Fairgrounds in Pomona. The owner, a Chinese-American holding firm with both a garment business and a roofing supply business, was looking to capitalize on the hot market.

The building was put on the market in December 2005 and within three weeks there were three bidders.

Saurenman was one of the three, but unlike the other two, he offered the full asking price. "By this time, I was so thankful just to find anything at all remotely suitable."

The escrow went without a hitch, closing in late March 2006, ending his long ordeal.