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Friday, Mar 29, 2024

Valencia Building Boom Meets Needs for Larger Space

A bit of a building boom is starting to get underway in Valencia, with several industrial land purchases just closed. AEW Capital Management and Sheridan Ebbert Real Estate Development purchased a 5-acre parcel of land in Gateway III of the Valencia Commerce Center with plans to build a speculative industrial building of 110,008 square feet for lease. What’s interesting about the upcoming development is that it is bucking a trend to construct smaller buildings catering to owner/users who have increasingly been choosing to buy rather than lease their space. The AEW/Sheridan Ebbert deal will be designed either for a single tenant or two tenants. “They’re realizing that this market segment is underserved,” said Craig Peters, a broker with CB Richard Ellis, who, along with Doug Sonderegger, represented the seller, Newhall Land and Farming, in the deal. “A lot of people have been building small building for sale, but Sheridan and AEW felt there’s strong demand in the larger ranges so they see that as a market with potential.” There have lately been a number of large industrial lease deals in the area. Among them, Certified International Corp. leased 206,000 square feet and Archway Marketing Services leased 93,000 square feet in the Commerce Center. Peters would not disclose the purchase price for the property, but other sources estimate it was in the range of $2.6 million. The developers plan to start construction in April. In another deal, LNR Property Corp. acquired an 11.3 acre site in Gateway VI with plans to build six buildings for sale or lease. The buildings will range in size from 27,000 square feet to 52,000 square feet. LNR is believed to have paid about $6 million for the property, which it bought from Newhall Land. LNR, in a joint venture with Lennar Corp., owns Newhall Land. This is the first project the company is developing in the Valencia center. Construction on that development is due to begin in the second quarter, and the project should come on line before the end of the year. Peters and Sonderegger also represented that deal and will market both the developments. Meanwhile, over 500,000 square feet of office space is under construction or about to get underway in the Valencia area. Among the developments, JSB Development and McCombs Consulting are about to get underway with Tourney Place Phase 2, a three building complex totaling 72,000 square feet, is about to get underway. Office Vacancy Rates Plunge Office vacancy rates in the greater San Fernando Valley tumbled into the single digits in the fourth quarter of the year, raising some concerns over availability as 2005 unfolds. In the fourth quarter of 2004, vacancies dropped to 8.8 percent, down from 10 percent in the third quarter and 12.8 percent in the fourth quarter of 2003, according to data just released by Grubb & Ellis. Net absorption (the amount of square footage absorbed less the amount vacated) was 302,446 square feet in the quarter, the report said. Grubb & Ellis’s North Los Angeles territory includes the Valley floor and the Santa Clarita and Conejo valleys. In Burbank, which is broken out separately in the data, vacancies dipped to 12.9 percent, down from 13.8 percent in the third quarter but higher than the 11.7 percent vacancy rate in the fourth quarter of 2003. Despite the improved vacancy rates, asking rents in the region remained stable at $2.15 per square foot for class A properties in the North Los Angeles region. Asking rents in Burbank in the fourth quarter were $2.60 per square foot, a three cent drop from the third quarter, but an improvement over the year ago quarter when asking rents in Burbank were $2.53 a square foot. The fourth quarter improvement in the office leasing market is expected to continue into 2005, the Grubb & Ellis report predicted, bringing fewer landlord concessions to new tenants and rent increases in some markets, including North L.A. “Little to no concessions are anticipated in 2005 for tenants in such markets as Pasadena and the West and Conejo Valleys of northern Los Angeles, where vacancies are expected to reach single digits by late 2005,” the report said. Vacancy rates in the fourth quarter were highest in the West Valley, hovering at just over 10 percent. The Santa Clarita Valley saw the lowest vacancy rate in the quarter, 6.6 percent. Brokers generally report that leasing activity appears to be picking up throughout the Valley, and with occupancy near full in many submarkets and little new construction underway, there is concern that if more tenants come into the market there will be a dearth of supply to show them. Only 324,613 square feet of office space is currently under construction in the North L.A. region. By comparison, 1.1 million square feet of space was absorbed in 2004. Residential News Keller Williams Realty has opened its seventh office in the San Fernando Valley since first moving into the region about a year ago. The office, in Woodland Hills, will cover the Woodland Hills and Calabasas areas. Ron Ario, operating principal, and Wendy Silver-Hale, team leader, will lead the office team of about 25 agents. The residential real estate brokerage, founded in 1983, is headquartered out of Texas, and currently has some 409 company owned and franchised offices. Lancaster Sale Antelope Pines Apartments, a 314-unit townhome and apartment community in Lancaster, was sold for $28.2 million. The community sits on 14.24 acres and was built in 1985. Occupancy is currently at 95 percent. John Walsh, Victor Nolletti and Steve Witten at Marcus & Millichap represented the seller, a New York based private investor. Walsh also represented the buyer, Bascom Corp. Senior reporter Shelly Garcia can be reached at (818) 316-3123 or by e-mail at [email protected].

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