Tag Archives: los angeles

Vernon Livestock Rendering Plant

Animal Fat Recycling Plant, Food Processing, Vernon, CaliforniaLos Angeles Magazine has written a lengthy article about Baker Commodities, a livestock rendering plant based in the City of Vernon, California, near Downtown Los Angeles.  It is the oldest rendering business in L.A. and the largest on the West Coast.  In 2008, some 250 U.S. rendering plants like Baker took in 54 billion pounds of killed livestock—blood, bone, guts, legs, hide, muscle, and head, the detritus of slaughter—warmed the raw material in cookers, and squeezed out a clear liquid called tallow.

Baker seizes on fat wherever it can: dairy cows that have died in the heat of the Central Valley, the trimmings left over from the purchase of a Niman Ranch roast at Whole Foods, steaks and chickens whose shelf life at Pavilions has expired. The company retrieves grease from deep fryers at McDonald’s and the drippings of ribs in the Vons hot section. Rendering is the most elemental form of recycling, the regeneration of the dead into soap and scented creams. It has existed for millennia in societies, and its reach in modern America is staggering. We live in a vast cycle of fat reclamation, one that stretches from the killing floors of the Midwest to our medicine cabinets, making a stop along the way at the local Burger King.

Every restaurant and fast-food stand in L.A. has a fat reservoir called a grease trap, usually secreted under the parking lot. A trap may strain as much as 15,000 gallons of liquid fat from a kitchen’s drains, though the speed at which it fills depends on what’s cooking upstairs. A Burger King trap can take three months to fill, while an El Pollo Loco trap might need to be emptied in weeks. There are tens of thousands of grease traps citywide, each a promising revenue source for rendering companies. Baker taps around 8,000 of them.

Biodiesel!  About 40 pounds of good ground beef heated to 250 degrees will produce enough tallow to make a gallon of biodiesel. The process is insanely wasteful if cattle are raised for it alone; you’d need to boil an entire cow to fill your Chevy Volt. Yet there’s no shortage of cow remnants in slaughterhouses, and U.S. production of biodiesel from renderers has grown from 78,000 metric tons in 2007 to 400,000 metric tons in 2008.

Full article.

Industrial Activity Slow But Steady

The Southern California industrial market continues to exhibit consistent demand for tenant space and strong occupancy levels.   The five-county area, which consists of approximately 1.7 billion square feet of industrial space, maintained a low vacancy rate averaging approximately 3%.

The economic climate is posing many challenges to the Los Angeles county as well as the Industrial Market;p however, the fundamentals remain in place for strong performance in the marketplace.
Capitalization Rates for industrial investment properties hovered just below six percent.  Vacancy remains low in the 3-5% range, but several points higher in the Inland Empire.  Many brokers have seen a 20-30% decline in transaction volume and demand.

More specifically, Gross Absorption is 50% compared to a year ago, with 2008 Q1 at 2.2 million versus 2007 Q1 at 4.1 million for the Central Los Angeles area.  The Central Los Angeles Market is the largest industrial base in Los Angeles County.  The Central Market remains one of the tightest and strongest submarkets in the region with little if any new construction due to the high cost and low availability of land.

To some degree, reduced container traffic has contributed to the diminished demand.  Containers handled at the ports of Los Angeles and Long Beach were down 5.6% and imports sunk 5.9%, while exports increased 22%.  Lease rates have held steady though.  Although, tenants are demanding more concessions in the form of free rent and tenant improvements.

Central Los Angeles Industrial Market Boundaries

The Central Los Angeles industrial real estate market encompasses approximately 300 million square feet of building area.  This market includes the well-known submarkets: City of Vernon, City of Commerce, and Downtown Los Angeles.  It should be noted that the following areas on the periphery to Downtown are also included in the Central LA market: Lincoln Heights, Glassell Park, City Terrace, East L.A., Boyle Heights, South Industrial, and the Goodyear Tract.  In the Central LA submarket buyer and tenant demand remains strong compared to outlying markets.  In fact, the Central submarket remains the tightest metropolitan industrial market in the nation.  This submarket is an infill market and very little new construction occurs on empty industrial land (with almost no construction on other types of commercial real estate such as retail and office).  The Central LA market is also the largest industrial real estate submarket in Los Angeles County.

Warehousing Proximity to Ports of Los Angeles & Long Beach

There is an unrelenting desire by warehouse users to occupy properties within close proximity to Los Angeles’ ports – where 40 percent of all containerized cargo enters the United States.  Vacancy rates remain historically low in the Southern California Industrial Real Estate market, however, a flattening of cargo activity at the local Los Angeles and Long Beach ports may spell a warning for the area’s outlook in 2008.  The fact remains, though, that the two ports ranked first in the nation for container activity in 2006, placing 5th in the world. In the above aerial photo, industrial parcels are outlined in green.