Supply dwindles as big deals cluster around business parks.

THE vacancy rate for industrial property in the San Gabriel Valley, already the lowest in the county, continued to decline as some of the last remaining developable land was taken off the market.

The fourth quarter rate was 1.2 percent, down from 1.5 percent in the third quarter and 2.3 percent for the like period a year earlier, according to Grubb & Ellis Co. While the inventory of available space in the 169.7 million-square-foot market slipped, asking rents remained steady at 48 cents per square foot The asking rent in the year ago period was 43 cents triple net--excluding taxes, insurance and maintenance.

The largest deals to close in the fourth quarter were clustered around Fairway Business Center, Grand Crossing and Irwindale Business Center, all mammoth business parks in City of Industry.

Sale and leasing activity, slowing down as inventory dwindled, was at 1.7 million square feet from 2.3 million square feet in the third quarter and 1.8 million in the fourth quarter of 2003.

"If the pace of the demand continues, we'll be running into a problem of very little supply," said Jim Center, a senior vice president at Grubb & Ellis. "There's still way too much money and buyers, both institutional and individual, and not enough product, so it will continue to be a seller's market for the foreseeable future."

Net absorption rate--the amount of space taken off the market by new leases--was also down to 686,473 from 800,000 in the third quarter.

The October-December period saw one of the last large tracts of land that could be developed disappear from the market when Toledo-based Libby Glass Co. sold the 27-acre parcel that had housed its regional plant for about $15 per square foot to Fremont-based Sates-Regis Group. Libby shut down its manufacturing operation in the third quarter and moved it out of state and is now leasing back space from Sares-Regis for storage and distribution. Sares-Regis plans nine industrial buildings on the site ranging from 21,000 square feet to 105,000 square feet.

"The Libby glass sale was very aggressive and shows how much land is in demand here," Center said. 'q-he deal closed un-entitled, with no (other) tenants waiting."

At the 400-acre Grand Crossing industrial park, Majestic Realty Co. broke ground on an 800,000-square-foot build-to-suit project for Jakks Pacific Inc. Majestic manages the park for Industry East Land LLC, which holds the land in a long-term lease from the City of Industry Development Agency.

The Malibu-based toy manufacturer signed a seven-year lease for 600,000 square feet in a deal valued at $17 million. It is expanding from a smaller space across the street, according to Kent Valley, senior vice president at Majestic.

Although Grand Crossing still has 120 acres yet to develop, it can't be put on the market quickly enough to respond to the fierce demand.

"It looks like you could just build on it, but there's still entitlement and other planning issues to go through," Valley said. "If I could build it all out tomorrow, I would do it."

In October, Majestic broke ground at Grand Crossing on a 600,000-square-foot warehouse and distribution facility for an unnamed tenant and completed a 400,000-square-foot building that was leased in December to APL Logistics. APE a third-party shipper of consumer goods, signed the $11 million 18-month lease, vacating a 250,000-square-foot space in the Fairway Business Center, also managed by Majestic.

Standard Furniture Manufacturing Co. expanded to a 325,000-square-foot space at Grand Crossing, relocating from a 170,000- square-foot spot on Pellesier Place in Industry.

In December, Majestic completed a 270,000-square-foot build-to-suit for Golden State Foods, the primary distributor for McDonald's Corp.'s local restaurants. Golden State signed a 10-year $17 million lease and is expected to employ about 200 people.

At the Fairway Business Center, the 190-acre, rail-served park owned by Principal Mutual Life Insurance Co. and Majestic, General Electric Co. signed a 10-year extension of its lease for a 1.3 million-square-foot warehouse and distribution center for major appliances for $60 million.

In November, Vistar Corp. leased 184,000 square feet of warehouse distribution space at 16639 Gale Ave. in Industry from Gale Julian LLC for $12.5 million.

At the Irwindale Business Center, Dealer Tire, a provider of tires and accessories for auto retailers, leased 94,500 square feet in October for $2.4 million.

In addition to the large leases, Grubb & Ellis finalized 13 smaller leases in the fourth quarter for spaces ranging in size from 22,000 to 70,000 square feet.

Grubb also completed 24 sale transactions there in the fourth quarter, the largest of which was at the 90,800-square-foot multi-tenant San Dimas Freeway Business Park. The park houses offices, business incubator spaces, manufacturing and warehouse distribution. The buyer, San Dimas Freeway Business Park bought the property from Ted R. Cooper Properties for $7.7 million.

Major Events:

* General Electric Co. signed a 10-year extension of a lease for 1.3 million square feet of warehouse and distribution space at the Fairway Business Center for $60 million.

* Jakks Pacific Inc. signed a seven-year lease for 600,000 square feet of warehouse and distribution space at Grand Crossing industrial park. Deal value was $17 million.

* Libby Glass Co. sold 27 acres of partially developed land for about $15 per square foot to Sares-Regis Group.

* APL Logistics signed a 400,000-square-foot, year-and-a-half lease at Grand Crossing for $11 million.

* Standard Furniture Manufacturing Co. expanded to a 325,000-square-foot space at Grand Crossing

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