Category Archives: Market Trends & Indicators

City of Commerce – A Brief Development History

The City of Commerce encompasses a land area of 4,197 acres, or 6.54 square miles. Since the 1920’s, the Commerce area was developed with heavy industrial uses. Major industrial firms in the
area included three tire factories (Uniroyal, Goodyear, and Goodrich), a regional automobile assembly plant (Chrysler), and two heavy steel fabricating plants (U.S. Steel and Republic Steel). Due
to changing economics, the heavy industrial users began to close their area factories in the mid-1960s. Redevelopment of these Iarge facilities into smaller industrial projects followed.

The History of the City of Commerce traces back to the late 1700s, when the area destined to become Commerce served as an anchor station of El Camino Real (the King’s Highway), a trail blazed by Father Junipero Serra to connect the missions between San Diego and Sonoma.

Originally part of a 29,513 Acre Spanish land grant, the region was guaranteed a healthy future in 1887 when the Atchison, Topeka and Santa Fe Railway Co. built its main line here.

The Commerce area grew and prospered over the decades, becoming a major manufacturing hub during World War II. In 1955, when California adopted a uniform sales tax law, nearby cities attempted to annex this valuable island of county land in order to secure its thriving tax base.

But industry leaders here banded together to defeat annexation and formed the Industrial Council, which worked with residents to incorporate the City of Commerce. Approved by voters on January 28, 1960, incorporation occurred at a time when most of the City’s industrial base consisted of major multi-acre factories.

By 1970, virtually all of the land in Commerce had been developed and continued growth seemed impossible. But over the years, drastic changes in the automobile, steel, rubber, and other heavy industrial forced the closing of obsolete factories, making hundreds of acres of land available for redevelopment. Approximately 64 percent of the city’s land area is designated as industrial.

The largest real estate developer in the city was the Trammell Crow Company, who was the first firm to redevelop older heavy manufacturing facilities. Their largest project, the former U.S. Steel
plant (at the intersection of Slauson and Eastern avenues), was redeveloped with approximately l 0,000,000 square feet of new industrial space during the 1970’s. It is now known as Commerce
Pork, and is one of the largest business parks in the country. Another site redeveloped by the Trammell Crow Company is the old Uniroyal Tire and Rubber plant. Now known as the Citadel, this 35-acre site was redeveloped with a 201-room Wyndham Gorden Hotel, 233,000 square feet of industrial space, 138,000 square feet of factory outlet retail space, 146,000 square feet of office/research and development space, several restaurants, and a health club. Total project costs were reportedly $90,000,000. Craig Realty Group acquired the entire 35 acre property in July 2003.

Alameda Corridor Update

The Alameda Corridor is a 20-mile railroad “expressway” that connects the World Ports of Los Angeles and Long Beach with the national rail system. The Corridor began operating in April 2002 and its main purpose was to alleviate truck traffic on local freeways and create a more efficient way to move cargo containers from the Ports of Los Angeles and Long Beach to the Downtown Los Angeles rail  yards. Effectively, the Corridor has created an efficient solution to get cargo containers from the Ports to major inland distribution points in the Inland Empire and as far east as Kansas City and Chicago. As of April 2016, the Alameda Corridor was handling an average of almost 36 trains per day and over 11,000 TEU’S. The Alameda Corridor Transportation Authority (ACTA) owns and operates the Corridor and charges user fees to the railroads on a per-TEU basis.

The five-county Greater Los Angeles region represents the largest industrial market in the nation with approximately 1.0 BSF, connected by the region’s modern sea ports, highways, railways and airports. The region historically has boasted the strongest market
fundamentals in the country relating to rents, vacancy and availability rates and pricing. In Greater Los Angeles, the overall vacancy rate was 1.2% as of the fourth quarter of 2017. The market also generated 9.3 MSF of gross activity in the fourth quarter.

City of Los Angeles Approves Recreational Cannabis Regulations. Boon to Industrial Property Owners

The Los Angeles City Council voted and approved new regulations for recreational cannabis businesses. Recreational marijuana will officially spread like wildfire on January 1, 2018, per California state law. This will be a boon for industrial real estate landlords as cannabis growers and cultivation operations typically pay premium industrial rental rates compared to regular warehouse and manufacturing users. Pot growers often pay in excess of 2X the market rate. Some key rules are below from the L.A. Times article. The mayor is expected to sign the ordinance soon.

12/20/2017 UPDATE: the Mayor signed the cannabis ordinance.

Under the new regulations, pot shops can open their doors only in specific commercial and industrial zones and must operate at least 700 feet from schools, public parks and libraries, child care centers, alcohol and drug treatment centers and other “sensitive” sites, as well as from other pot retailers.

Other kinds of marijuana businesses, including growers and manufacturers, would be confined to industrial zones and banned within 600 feet of schools. And marijuana manufacturers that use volatile solvents would also be prohibited within 200 feet of residential areas.

To prevent an “undue concentration” in neighborhoods, city leaders also decided to cap the number of pot shops, growers, manufacturers and marijuana “micro-businesses,” which do a combination of things, allowed in each community.