California Apparel News

The apparel industry in California, which has been changing its profile in recent years, is also altering the look of its real estate landscape.

As production jobs continue to migrate overseas, importers, textile companies and other post-production outfits are taking over the buildings vacated by cut-and-sew operations in the main manufacturing bases of Los Angeles and San Francisco.

According to the Los Angeles County Economic Development Corp., the California apparel and textile industries will shed close to 7,000 jobs this year. As a result, apparel manufacturers have left behind a lot of real estate. But surprisingly, the migration has not affected prices much—real estate continues to be in high demand in the state.

“Everyone was a little surprised,” said Larry Isles of Daum Commercial Real Estate, speaking about the tight market. Isles said his company recently studied real estate along Los Angeles County’s Harbor Freeway corridor down to the South Bay region and found only a 2 percent vacancy rate.

“It’s tight, and the problem is, with interest rates going up, the economy is going to get better and these companies will be looking to expand, but there will not be many places to go,” he noted.

Real estate brokers who work in the main apparel markets of Los Angeles said apparel companies have acted quickly to take up space that failing companies have left behind. But as one manufacturer leaves, it is not always likely another manufacturer will come in, they said. Pre-production operations, designers and patternmakers are among those taking over spaces that used to house cutting machines and sewing rooms.

“Instead of sewing, they’re doing finishing now,” observed Michael Man, a real estate broker with Major Properties in Los Angeles.

That’s the nature of the apparel industry, added veteran real estate executive Steve Needleman, chief executive officer of Anjac Fashion Buildings. “There’s lots of creativity. The garment industry is still strong here, though it’s smaller and has consolidated. You’ve taken out a lot of [manufacturers], but you’re filling in with residential and other elements and you still have to cater to that.”

The area south of the Santa Monica Freeway leading down to King Boulevard had been a popular market for knitting mills, sewingequipment distributors, dye houses and notions dealers. But lately, importers and fabric companies have made up the general demographic.

Daniel Park, a broker with Magic Properties in Los Angeles, said 60 percent to 70 percent of tenants in this submarket have ties to Korean-based apparel and textile companies.

Lease rates are going for 50 to 70 cents per square foot, and sale prices range from $70 to $90 per square foot, said real estate brokers, citing recent transactions.

Los Angeles apparel companies looking for more than 100,000 square feet have been heading to Vernon, Calif., Commerce, Calif., or the South Bay, which have seen similar shifts in demographics.

“Here in Vernon, the industrial base is dropping off and we’re seeing more textile companies looking for warehouse space along with fabric cutters,” said Scott Edwards of Chris Stone & Associates, a Vernon-based dye house.

Vernon remains attractive to apparel companies because of its lowcost energy, supplied by the city, and its proximity to the ports and the downtown Fashion District, said Mike Brent, vice president of Lee & Associates, a City of Industry, Calif.–based real estate firm.

“There’s not a lot of huge turnover here, despite what we’ve heard about the garment sector downsizing,” Brent said. “A lot are working on narrow margins and holding on to their bootstraps, but as far as real estate goes, this market is vibrant.”

Companies looking for larger spaces are also heading to Gardena, Calif., where Canadian giant Nygaring;rd has set up a state-of-the-art distribution facility. Others have gone to the Inland Empire, where there are more new facilities.