Foreign Trade, Investors Boost Industry Land Cost : Goodglick Survey Finds Some Prices Doubled for Properties Used for Warehousing, Distribution

Foreign trade and foreign investors are helping fuel an increase in land costs in the industrial area serving the harbors and Los Angeles International Airport.

This is the finding of a study made by the Goodglick Co., Beverly Hills-based commercial and industrial broker.

Five years ago, land costs in the industrial areas of Carson, Compton and Dominguez were in the range of $5 to $7 a square foot. Today, the study shows, the range is $12 to $14 a square foot.

The area serves warehousing and distribution companies, manufacturers and assemblers, garment makers and other firms.

Aerospace Relocation

Daniel Merritt, a senior consultant at the Goodglick Co., said the the aerospace and electronics industry is moving into the South Bay area to escape the $25 to $30 a square foot prices near International Airport.

Merritt doesn’t believe that defense cutbacks, should they occur, would necessarily affect the Carson and Dominguez area.

“We have TRW, Hughes, McDonnell Douglas, that’s true,” he said.But the main thrust is the warehousing, distribution and trucking business. The Koreans and Taiwanese are coming in very strongly. We’re also starting to see some Chinese export and import activity.”

He also noted that while the big Japanese conglomerates are in the area, the Taiwanese and Koreans are buying smaller properties.

“I would say that smaller properties have gone up at least 20% in the last two years.”

Not Selling Land

Merritt emphasized that the largest landholders in the Carson/Dominguez area, including the Watson Land Co. and the Carson Estates Co., have historically preferred not to sell land, but to build industrial facilities for lease.

Escalating land costs in West Los Angeles have caused the construction of office buildings on property originally used for industrial buildings. The result is that industrial firms are moving south, which is increasing rates all the way from El Segundo to the Long Beach area.

South Bay land costs, he said, are now at the point where price-sensitive companies that do not have to be near the port, are considering moving as far east as Ontario, Rancho Cucamonga, Fontana and Moreno Valley. Their place is being taken by foreign firms, aerospace and electronic firms and other manufacturing firms able to sustain higher rents.

The air freight industry operates in a sector adjacent to International Airport, typically using buildings with warehouse facilities on the first floor and offices above. Rents have been rising to 80 cents to 90 cents a square foot plus such costs as property taxes, insurance and maintenance.