SOUTH BAY OFFICE MARKET HAS BEST QUARTER IN TWO YEARS,
FIRST-QUARTER REPORT REVEALS
TORRANCE, Calif., April 16 /PRNewswire/ -- The South Bay office market was off to a strong start in the first quarter of 1992, with absorption up substantially from the same period a year ago, according to a report released today by Grubb & Ellis Commercial Services.
"This is the most office space taken off the market in a single quarter in the South Bay in more than two years," said Malcolm Palmer, office properties specialist with Grubb & Ellis' South Bay office.
According to the building-by-building report, 203,427 square feet of office space was absorbed during the first quarter of 1992, up from 1991's first-quarter total of -36,000 square feet. Absorption is defined as the net change in occupied space from one quarter to the next.
The vacancy rate in the South Bay office market stood at 20.7 percent as the first quarter ended, up slightly from the 20.5 percent posted for the same period a year ago, the study noted.
Construction of new office space in the South Bay hit zero in the first quarter. A year ago, 357,000 square feet of office space was under construction.
The Long Beach Suburban submarket led the South Bay in absorption with 106,085 square feet. Much of that total was attributable to the County of Los Angeles taking 64,000 square feet for 10 years in Watson Corporate Plaza, according to Palmer.
"Tenants able to project their requirements into the future are taking advantage of soft rental rates and locking into 10-year deals," Palmer said. "Tenants that are more uncertain are opting for shorter- term leases."
Torrance Freeway also posted healthy absorption in the first quarter with 68,940 square feet, the report said, with University of Redlands taking 8,500 square feet and J. Hill & Associates occupying 10,000 square feet.
"We are also seeing users taking advantage of attractive sale prices and purchasing buildings with plans to occupy large portions and lease out the balance," said Palmer. "For example, Western Waste bought a 145,000-square-foot project in Torrance and will be occupying 49,000 square feet."
El Segundo/Manhattan Beach, which has the South Bay's largest concentration of aerospace users, posted 10,030 square feet of positive absorption in the first quarter.
"This positive absorption was achieved despite 86,000 square feet of office space being returned to the market by TRW in El Segundo," said Palmer. "As aerospace users continue to downsize, we expect to see more space come back on the market."
LAX/Century Boulevard recorded positive absorption for the second quarter in a row with 14,036 square feet, with two tenants in the market expanding, the study noted.
Downtown Long Beach posted 7,637 square feet of negative absorption in the first quarter, with mostly small deals taking place in the market.
In the South Bay's remaining submarkets, Carson posted 22,948 square feet of positive absorption, while Torrance Central recorded 10,975 square feet of negative absorption, the report said.
Vacancies in the South Bay's submarkets for the first quarter ranged from a high of 33.4 percent in LAX/Century Boulevard to a low of 12.6 percent in El Segundo/Manhattan Beach. Vacancy rates recorded for the other submarkets were: Torrance Freeway, 22.6 percent; Torrance Central, 18.3 percent; Carson, 23.1 percent; Long Beach Suburban, 20.3 percent; and Long Beach Downtown, 28.2 percent.
/CONTACT: Sharon Abar of Grubb & Ellis, 714-937-0881/ CO: Grubb & Ellis ST: California IN: SU:
KJ-CH -- LA021 -- 9347 04/16/92 13:39 EDT