"Our market is transitioning dramatically from a cheap land area to a world of its own," said Paul Earnhart, commenting on the Inland Empire submarket. The executive vice president of Lee & Associates reported that the Inland Empire absorbed 25 million sq. ft. of industrial space in 1999.

Commenting on a submarket thought to have an endless supply of land, Earnhart added: "The Inland Empire is rapidly developing a shortage of developable land.

In fact, if the current trend does not subside in the next two years, you will see many more deals going east to Redlands and beyond." Earnhart forecast new highs in building sale and land prices during 2000.

Steve Calhoun, SIOR, senior vice president for The Seeley Company/Colliers International, stated that ongoing movement of companies from Central Los Angeles, Vernon, Commerce and the South Bay is creating a shortage of land in the hot Mid-Counties submarket.

"Land prices have risen to $10 to $12 a square foot, but there’s simply not much property out there," Calhoun said.

Nonetheless, he predicted another strong year in Mid-Counties with heavy tenant demand driving the market and buoying rents.

Commenting on the San Fernando Valley submarket, Michael LaRoque, executive vice president of Daum Commercial Real Estate Services, said the region would experience continued growth and demand, but that prices may level, then spike up later in the year.

"Renovation of existing facilities in the Valley will finally take hold," said LaRoque, in light of diminishing building supply. He stated that he also sees the early stages of resistance to lease rates in the Valley, but the demand remains strong.

Stating that the South Bay has "its lowest building availability rate in years," Jeff Morgan, senior vice president of CB Richard Ellis, reported that 11.3 million sq. ft. of space was absorbed in 1999. "There would have been much more with greater availability," he said.

Morgan declared that traditional companies are experiencing tremendous sticker shock for facilities on the Westside, thereby pushing companies to the South Bay.

Industrial space demand in Orange County will skyrocket in 2000, according to Louis Tomaselli, senior vice president, Voit Commercial Brokerage.

"Lack of land in Orange County is the number one factor influencing the market. This is driving prices up as only a few new industrial projects come on line," Tomaselli said. He forecast a 5-7 percent increase in rents for the area.

Central Los Angeles is a "changing market", according to Tim Wetzel of The Seeley Company/Colliers International.

"This area is now influenced by the fact that Los Angeles serves as an incubator for entrepreneurs launching their own business. Because of this, we are seeing big rental numbers downtown, from 65 cents to 80 cents per square foot, and a vacancy rate of five percent. Similarly, nearby Vernon and Commerce show vacancies in the four percent range."

"This market will get tighter and tighter with asking rates rising accordingly."

To date, CSCDC has helped finance approximately $892 million in real estate for businesses throughout California.

The primary mission of CSCDC has been to provide second mortgage, long-term, fixed rate financing through the SBA 504 program for businesses seeking to purchase facilities for expansion.

These 504 second mortgages allow banks to participate in the business expansion by reducing their risk on real estate exposure. The 504 program allows the business person to acquire a facility with as little as 10 percent down, so they can reserve their cash for further growth.

In addition to its SBA lending activity, CSCDC is committed to providing expansion capital to businesses located in rural areas through the Farmers Home Intermediary Relending Program. CSCDC has provided over $3.4 million to rural businesses for expansion purposes.

In conjunction with its lending programs, CSCDC provides in-depth technical assistance to rural businesses in the areas of financial management and loan packaging when such help may result in business expansion, new jobs or positive economic impact with the local economy.

CSCDC will also work in cooperation with interested federal, state and local officials to provide technical assistance and training opportunities in the area of economic development for California communities.

Barbara A. Vohryzek is founder and executive director of CSCDC.