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Antelope Valley Gets Industrious

Antelope Valley Gets Industrious By SHELLY GARCIA Senior Reporter A huge development boom is underway in the Antelope Valley, with nearly 1 million square feet of industrial property in varying stages of construction in Lancaster alone and thousands more in earlier planning stages in Palmdale. Developers who have never considered the area before, mostly regional and local firms, have acquired land with the intention of building industrial facilities for sale and for lease. Although their enthusiasm is tempered by the fragile history of the area and its building busts, these developers say the dynamics in play in the Antelope Valley now are different enough and sufficiently promising to warrant the investment. “If you look at Southern California, the basin is really getting full, so everything has to go either north or east,” said Greg St. Clair, executive vice president for Larwin Investment Co., which is developing 225,000 square feet of industrial property on 16 acres in Fox Field Business Park, a new industrial complex bordered by Barnes Avenue, 47th Street West and Avenue G in Lancaster, the first industrial venture into the area for the developer. “We’re beginning to see the push now into Lancaster. There’s a great employment base, there’s a lot of positive attitudes toward growth and then there’s enterprise zones that really assist small manufacturing firms.” Some of the development is coming from owner-users like Valencia-based Regent Aerospace, which has contracted for a 75,000-square-foot build-to-suit in Fox Field and Delta Scientific Corp., which just opened a new facility built for the company in Palmdale. But for the first time in decades, developers are also building “on spec” in Antelope Valley, meaning they have no specific tenants ready to occupy their buildings. Among the developments underway in addition to Larwin: >Culver City-based UDC Properties Inc. is constructing four buildings totaling 66,000 square feet on six acres in Lancaster Business Park at Avenue K-8 and 5th Street East and will begin work on another eight acres next year. >Cambridge Development Group LLC in Encino is building 93,000 square feet of industrial properties in Lancaster Business Park. >Frank Visco, a local Antelope Valley developer who recently completed a project for Countrywide Financial Corp., is acquiring 32 acres of land in Fox Field Business Park. >Santa Monica-based McGarrey Development Co. Inc. is working on a 10.4-acre project in Lancaster Business Park with a total of 138,434 square feet planned in two phases. >Kestly Building Company with Lanet/Shaw Architects is developing a 22,500-square-foot industrial condominium complex at Lancaster Business Park. >Robert Brown and Rosalie Clark Brown are developing 42,000 square feet of incubator units in Lancaster Business Park. City development “It’s as hot as I’ve ever seen it,” said Vern Lawson, marketing and economic development manager for the City of Lancaster Redevelopment Agency. Meanwhile, in the neighboring city of Palmdale, plans are underway to develop a 120-acre industrial park the city acquired in hopes of providing a ready supply of properties for companies seeking to relocate. “One thing we’ve had as a disadvantage, when businesses come here they’re moving within three to six months and we’re saying we can’t have anything ready for 12 months,” said Dave Walter, economic development manager for the city of Palmdale. Palmdale acquired the Fairway Business Park about four years ago and has been subdividing the property and putting in the infrastructure since then. Besides Delta Scientific, several smaller end users have contracted for facilities and a few developers have already acquired parcels in the park, located along Avenue O, between 7th Street West and Division Street. Back in the 1980s, Antelope Valley became ground zero for Southern California’s aerospace boom, setting into motion a wave of industrial construction and homebuilding. But by the mid-1990s funding for these companies had dried up and with it the budding economic base of the area. Homes foreclosed, industrial buildings were abandoned and the area stagnated. Some of the developers now building in the area were burned here years ago. “What am I calling it? Project disaster. Don’t you print that,” one said as he lightheartedly recalled the area’s real estate bust in the 1990s. But if developers are now willing to set aside that history it is because the Antelope Valley of today is very different from the aerospace headquarters of the 1980s. Consumer goods distribution and warehousing operations, small manufacturers and service and operations centers have been moving into the area. And the population growth, fueled by an abundance of housing at affordable prices, has also spawned a thriving small business economy of companies that provide everything from pool supplies to accounting services. Supply shortage Those businesses have been growing faster than the supply of buildings in the area. “I was attacking a market I feel is already there,” said Tom McGarrey, who figures he is about five months away from beginning construction on the first of 34 industrial condominium units that will range from about 2,000 square feet to 5,000 square feet each. “There’s already an established market in 3,000 square feet and under. People are paying rent, and I’m hoping they’re going to be attracted by the loans.” Those like McGarrey who are developing units targeted to small businesses, point out that SBA financing at current interest rates coupled with the tax advantages of ownership mean companies can acquire these facilities at a monthly cost that’s less than the cost to rent a facility. Those developing multi-tenant properties that they intend to lease point out that with virtually full occupancy in the area there is also a ready market for rental properties. UDC had leased up all seven of the units in one of its 17,000-square-foot buildings before construction was completed in January. Another property, a 16,000-foot building which will be completed sometime in August, is two-thirds leased. “I felt there was a need in the area for an upscale type of industrial warehouse,” said Ruben Urcis, president of UDC. “Most of the existing buildings were 12 or 15 years old.” While the lower pricing in Antelope Valley plays a part in these decisions on average a new building sells in the $95 a square foot range, compared in to an average of $125 per square foot in the San Fernando Valley most of the developers said that the more compelling reason to build in the area had to do with the scarcity of supply, both land and buildings, in the San Fernando and Santa Clarita valleys, and the increasing migration of the population to the area. While cost was definitely a factor for Regent Aerospace, which will use its Lancaster facility for manufacturing and distribution, officials said a bigger reason was the workforce already commuting from the area. “Thirty five to 40 percent of our workforce is coming from Antelope Valley,” said Reza Soltanian, president of Regent, which employs about 200. “That was one of the main reasons we chose Lancaster.”

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