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Friday, Mar 29, 2024

High Desert Industrial Market Heats Up Despite Vacancy Rise

It was hard to know whether to applaud or shield your eyes from the Antelope Valley industrial market. The vacancy rate skyrocketed to 6.6 percent from 3.8 percent in the second quarter, according to data from Colliers International. And much of that can be blamed on a 130,000-square-foot building in Palmdale coming onto the market after its previous occupant went out of business. The building at 600 Technology Drive was formerly occupied by Senior Systems Inc., a contract manufacturer of electronic components and circuit boards. The company filed for Chapter 7 bankruptcy in July 2012. There’s been interest in the building by potential occupants but nothing has been finalized, said Dennis Marciniak, a vice president in the Woodland Hills office of DAUM Commercial Real Estate Services who is the broker on the property. “The building has been vacant in terms of a company operating out of there,” Marciniak said. Then again, industrial sales and leasing activity rose to 201,600 square feet from just 61,400 square feet in the second quarter. And much of that was due to two high-profile properties that changed hands in Lancaster. BYD Co. Ltd., a Chinese manufacturer of electric vehicles, opened an assembly plant in May at a 105,715-square-foot building at 46147 Seventh St. West. The company also took over a former beer warehouse at 43851 Division St. for assembly of batteries for the electric vehicles. Having the high-profile BYD open its plant in the city now puts Lancaster in a position to attract other foreign investors. City officials have been in contact with other Chinese companies but could not comment on the state of negotiations. The small 881,900-square-foot office market absorbed 30,400 square feet, about on pace with the 32,700 square feet in the first quarter. Landlords dropped average asking rents to$1.42 a square foot from $1.58 in the second quarter. All that activity dropped the vacancy rate to 11.8 percent from 15.2 percent in the first quarter. Among the office sales was the Sycamore Square Office Park, a nine-building medical office center at 44507 16th St. West in Lancaster. It was purchased for $3.6 million by Hafco & Associates of Los Angeles from Santa Clarita real estate developer Spirit Properties Ltd. Brokers handling lease transactions describe the market as tight with small deals taking place as tenants move around between spaces. “We are getting activity but unfortunately there is a lot of tire-kicking going on as well,” said Susan Champion, who works out of the Lancaster office of Lee & Associates. The west sides of Lancaster and Palmdale are proving to be the more desirable areas for office tenants with prices staying reasonable, she added. Ryan House, a vice president in the Valencia office of brokerage firm Jones Lang LaSalle, said that he has clients in the Antelope Valley who cannot find suitable offices and are moving into empty retail space. Most of these tenants are medical- and government-related businesses or agencies. He said he is aware of developers who would like to build new office products but their plans remain on the drawing board. “I have not heard of anybody pulling the trigger,” he added. “That will not happen until the vacancy rate falls and there are no other options.” – Mark Madler Main Events – A section of Palmdale Marketplace, a shopping center at 39228 10th Street West, sold in May for an undisclosed price to real estate investment firm Merlone Geier Partners. The 500,000-square-foot center is anchored by Best Buy, Staples and Target, all of which own their buildings. The sale was limited to 215,202 square-feet of space in 11 separate buildings, according to CoStar Group Inc. Current tenants include Barnes & Noble, IHOP and Ross Dress for Less. – BYD Co. Ltd., a Chinese manufacturing company that makes electric batteries and vehicles, purchased two Lancaster buildings. It acquired a 44,372-square-foot industrial building at 43851 Division St. in Lancaster for $1.9 million in May. The building, constructed in 1978, was sold by Anheuser-Busch Cos. Inc., which had used it as a Budweiser distribution center. In April, it acquired a 105,715-square-foot building from RV manufacturer Rexhall Industries Inc. for $5 million. It has an option to purchase an additional 15 acres adjacent to the site. The company will open its first U.S. manufacturing operations at the Lancaster sites in October. – Sycamore Square Office Park, a nine-building medical office center at 44507 16th St. West in Lancaster, sold in April for $3.6 million. The buildings were acquired by Los Angeles firm Hafco & Associates from Santa Clarita real estate developer Spirit Properties Ltd.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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