As Kythera Biopharmaceuticals Inc. waits on the Food and Drug Administration to make a decision on its new drug to eliminate chin fat, the biotech is expanding its office footprint. This month, the company moved into a 33,000-square-foot space at 30930 Russell Ranch Road in Westlake Village – nearly double what it had at 27200 West Agoura Road in Calabasas. But there’s a quirk to the deal: it’s only three years, according to real estate data firm CoStar Group Inc., which is unusual for a growing company moving to a new location. “This does strike you as short term for a growing company,” said Jeff Albee, executive vice president at the Woodland Hills office of Sperry Van Ness. “They could need less space in three years or more. It depends on what happens with their drug.” Most experts believe the company has a lot of reasons for optimism regarding FDA approval. Kythera spent about seven years in clinical trials for ATX-101, an injectable treatment to reduce double chins. And after two successful trials late last year, the company submitted its product to the FDA for approval to commercialize the treatment. Faith in the company is reflected in the stock. Shares closed at $34.26 on Aug. 6, giving it a market cap of $776 million. The company declined to discuss any financial figures or the term of the lease, instead issuing a short email statement : “We moved because we are growing as a company and needed a larger facility to accommodate our employees.” The building has an asking rate of $2.95 a square foot according to CoStar, but Albee, who knows the building, thinks the deal was likely done closer to $2.30 a square foot, giving it a total value in the neighborhood of $2.7 million. The lease rate would still be above the overall average asking rate for the Conejo Valley, which was $2.19 a square foot in the second quarter, according to the L.A. office of Colliers International. Colliers also lists the Class A office vacancy rate in the submarket at 18.3 percent in the second quarter, but Albee said it’s closer to 9 percent if you break out Westlake Village. Medical Office Frenzy An Encino broker has been on a tear, leasing up medical office space in the Valley. In the last quarter, Jeremy Barbakow, senior vice president with NAI Capital Inc., has closed seven leases for space along Ventura Boulevard in Encino. The deals vary in size and value, ranging from a 5,815-square-foot lease to tenant Cardiovascular Consultants at 16542 Ventura Blvd. to a 945-square-foot lease to Balanced Group Acupuncture at 17200 Ventura Blvd. Cardiovascular’s lease is valued at roughly $2.2 million while Balanced Group’s is about $140,000. In total, the transactions add up to about 21,000 square feet of space and have a total value of about $5.7 million. “A lot of people are starting to believe in the economy and the medical industry again,” Barbakow said. Indeed, medical office is doing better than general commercial office in the Valley. Vacancy for medical space was 9.7 percent in the second quarter, according to the L.A. office of Colliers International. That’s significantly lower than the 14.9 percent office vacancy rate Valley wide. Also, there is far less medical space available, with an inventory of about 5.7 million square feet, about a quarter of the total Valley office market. Further Expansion Rexford Industrial Realty Inc. keeps buying up properties in the greater Valley. Late last month, the Los Angeles real estate investment trust shelled out $11.5 million for Avenue Kearny, a 139,000-square-foot industrial park in Santa Clarita. That followed a $16.8 million acquisition earlier in July in Chatsworth, as well as a $15.4 million purchase in Burbank in June. Altogether, the company has acquired about a half dozen industrial properties in the region since going public last July. The Santa Clarita property consists of two 1980s-era industrial buildings of similar size picked up from the Joan Kelso Family Limited Partnership of Calabasas and the Arnold & Caylene Gustin Living Trust of La Crescenta. Both buildings are fully leased to PDA Group, a packaging distributor to companies in the auto, chemical, cosmetic, food and personal-care industries. Rexford said it plans to upgrade the property with some aesthetic improvements and functional enhancements in an effort to pump up the rent upon renewing. Staff Reporter Elliot Golan can be reached at (818) 316-3123 or [email protected].
