Pace of lease activity picks up as builders complete projects.

SALES and leasing activity picked up in the sprawling Mid-Cities region even as new space was brought onto the industrial market driving up the vacancy rate.

The last quarter saw almost 3 million square feet of activity in the industrial corridor spanning from Bell to La Mirada, up from 2.3 million square feet in the prior three months.

Brokers said the area was benefiting from a spillover effect from the South Bay, where the market is tighter and there is little container storage. That and the continued growth of port trade have prompted developers to fix up older warehouses.

"We're seeing the demand for leasing larger facilities, 100,000 square feet or more, becoming pretty active," said Jim McFadden, a senior vice president at Grubb & Ellis & Co. in Anaheim.

"These investors are spending capital to correct some deficiencies like sprinkler(s), replacing roofs, freshening the buildings up and putting them back on the market with the anticipation that the rents are going to jump 15 percent in the next 12 months because of a lack of supply."

Another factor: port delays are making retailers rethink the strategy of just-in-time delivery, making them more interested in warehouse space.

"Ideally the retailers would take the product straight from the port and put it in the stores, but they can't, so they need to have the product on-hand to distribute it to the retailers when they need it," said Matt Eggleston, a senior associate at Cushman & Wakefield Inc. who specializes in the Mid-Cities area.

But with Gateway Pointe Industrial Park and other projects opening up for leasing, the Mid-Cities vacancy rate rose 0.4 percent to 4.3 percent in the second quarter, as total space available for rent grew by 472,000 square feet. Asking rents also fell 2 cents to 48 cents a square foot.

Big lease

The largest transaction of the second quarter was a seven-year lease at the 1.6 million-square-foot, 70-acre Gateway park in Whittier. Four Seasons General Merchandise Inc., a distributor and importer of general merchandise, took 613,000 square feet at 3777 Workman Mill Road, the largest of three buildings at the development. Eggleston said the deal was valued at roughly $21 million with total considerations.

The 265-acre, 5 million-square-foot Golden Springs Business Center in Santa Fe Springs is the largest industrial property under construction in the market and saw the three deals completed.

Started six years ago, it is coming into its final phase with one new building to be completed in September and two more to be ready early next year.

Bravo Sports, a skateboard and roller blade maker, is relocating to the park from Cypress, leasing a 154,000 square foot warehouse. Delta Apparel, a Duluth, Ga., activeware maker, signed a lease for 151,000 square feet after outgrowing a location in Buena Park. Purcell Murray Co. Inc., a distributor of high-end kitchen appliances based in Brisbane, signed a 124,130 square foot lease. Terms of the leases, which are at least five years, were not disclosed.

The market saw little sales activity given a dearth of buildings on the markets that can accommodate today's industrial buyers.

"The general trend that we are seeing the second quarter is a continued resurgence in the leasing market and insatiable demand to purchase with dwindling levels of supply," said Rick McGeagh, a senior vice president at CB Richard Ellis Group Inc.

However, the market may loosen when nearly 15 acres of commercial/industrial property MeadWestvaco is selling nearby is developed. The company had manufactured soda and beer pack wrappers at the Buena Park site but is leaving.

The site includes a 247,000-square-foot industrial building and 4 acres of vacant, surplus land. The sale is supposed to close later this month. The buyer and the proposed use have not been disclosed.

Major Events:

* Four Seasons General Merchandise, a distributor and importer of general merchandise, took 613,000 square feet at the Gateway Pointe Industrial Park in a $21 million deal.

* The 265-acre, 5 million-square-foot Golden Springs Business Center in Santa Fe Spring is entering its final phase, with one new building to be completed in September.

* Bravo Sports, a skateboard and roller blade maker, leased 154,000 square feet of space at the Golden Springs Business Center after relocating from Cypress.

* Delta Apparel, a Duluth, Ga., activeware maker, leased 151,000 square feet of space at the Golden Springs Business Center after outgrowing a location in Buena Park.