distribution facilities, particularly at or near major ports of entry or distribution hubs. Much of what the United States is importing is arriving from China, which has resulted in congestion at major West Coast ports.
“The demand for industrial (warehouse / distribution) space will continue in 2006 with the vacancy rate falling to 8% by the end of 2006. Industrial markets at or near major ports will continue to have the best performances. It is expected that there will be a 20% increase in new industrial construction in 2006 to accommodate specific distribution requirements and to replace buildings that are now considered to be obsolete.”
To bolster that concept, First Industrial Realty Trust Chicago-based REIT recently paid $6 million to acquire a 125,000-sf warehouse on 6.4 acres at 18201 S. Santa Fe Ave and plans to redevelop the site into an $18 million, 140,000-sf distribution facility. According to GlobeSt.com. The new facility will be geared toward companies shipping goods into the South Bay from the ports of Los Angeles and Long Beach. This property is much needed The vacancy rate for the Rancho Dominguez industrial submarket stood at just under 3% at the end of the first quarter, according to recent market reports.
Commercials and industrials are a strong area, and banks are clueing in to the commercial real estate industry’s impressive statistics. For the 30th consecutive quarter, the California Commercial Loan Delinquency Ratio is below one half of 1%, according to the California Mortgage Bankers Association. 99.86 percent of the California commercial real estate loans were either current or only one payment delinquent. This translates into a delinquency ratio of .14 percent - a three-year low ratio of Dec. 31, 2002.
The strong state of the industrial market is also allowing for a diverse selection of financing packages from commercial lenders. Recently, the Hunting Oaks Shopping Center in Monrovia refinanced with a $51-million, 10-year, interest-only loan.
Jeff Randolph, president of Avalon, says the deal “pushed the envelope” by providing interest-only financing for a commercial property. Randolph noted that the purpose of the refinancing was two-fold. The center's ownership wanted to lock in a lower interest rate and also to draw cash out in order to invest in other real estate projects.
Randolph says that the fixed-rate loan, through Wachovia Securities, is at a “very favorable” rate and replaces an older fixed-rate loan. The rate for the new loan is fixed over Treasuries at “a very competitive spread,” he says.
These types of loans are difficult to obtain, Randolph says, but the Huntington Oaks Shopping Center is “an exceptional asset.” The property is a 328,335-sf center at 1321 S. Mayflower Ave, where the 210 Freeway meets Huntington Drive.
Besides the high visibility location, the center's owners also landed the loan because of the 23-year-old property's successful track record of maintaining high occupancy. Its tenants include Toys "R" Us, Marshalls, Bed Bath & Beyond and Mervyn's, along with restaurants and specialty stores.
Randolph notes that the center played a vital role in the redevelopment
of Monrovia by attracting business and developers to the San Gabriel Valley
and generating significant sales tax revenue for the city.