Container volume continues to mount at California's ports, including Long Beach and L.A. Photo courtesy of the Port of Long Beach

   Industrial firms in the region face another housing-related challenge: Changed zoning that has brought residential property literally up against commercial and industrial corridors. The most pronounced effects have been near the ports, but other areas are seeing the same challenge. One redevelopment project in Orange Co. seeks to change that trend, and symbolizes the L.A. transition from industrial manufacturing to small business.
   L.A.-based real estate investment, development and management firm Lowe Enterprises has purchased from Johnson Controls Battery Group a 15-acre (6-hectare) site in Fullerton where the Wisconsin-based company has operated a 182,966-sq.-ft. (16,998-sq.-m.) automotive and marine battery plant. Johnson Controls will lease back the site for one year as it demolishes structures and completes environmental remediation. Lowe Enterprises will develop up to 24 buildings ranging in size from 7,500 sq. ft. (697 sq. m.) to twice that size for use by light manufacturing and warehousing companies.
   "Demand for industrial space remains strong while developable land is scarce, particularly in a mature market such as North Orange County," said Rick Newman, president, Lowe Enterprises Real Estate Group, western region, in early November 2005. "Our ability to quickly complete due diligence and experience with environmental clean up allowed us to quickly underwrite this transaction and close in just two weeks, meeting the seller's need to complete the sale before the end of its fiscal year.
   "Recent local zoning changes designed to increase housing inventory have converted some traditionally industrial areas into residential further constricting an already tight market," said Mike McNerney, senior vice president, Lowe Enterprises Real Estate Group. "With rising land values, small and mid-size companies are determining that ownership is a wise business strategy."
   The industrial condo approach has certainly worked elsewhere in Fullerton: In early February, the Brookhollow Group announced it had successfully sold all 22 industrial condos comprising Fullerton Industrial Park, acquired by Brookhollow from CIGNA Insurance Co. in January 2005. The purchased property consisted of 11 buildings totaling 228,401 sq. ft. (21,219 sq. m.). With the City of Fullerton's help, Brookhollow converted the property into 22 separate building units. Half were purchased by occupiers, the other half by investors.
   A similar strategy is behind Larwin Investment Co.'s 89,000 sq. ft. (8,268 sq. m.) of industrial space in nine buildings at the new Fox Field Business Park in Lancaster, in the Antelope Valley Enterprise Zone adjacent to Fox Field Airport in Los Angeles County. Half the buildings, which comprise the park's first phase, were complete in January 2006, with the remainder expected to be delivered in summer 2006.
   "The delivery of these state-of-the-art buildings will finally give small business owners in the Antelope Valley the opportunity to own a freestanding industrial building at a monthly cost that is less than the cost of leasing," said Ross Mitchell, project manager with Larwin Investment Co., in January 2006.