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Countrywide Woes Ripple Through Office Market

The credit crunch has the residential real estate market reeling. But how is it affecting commercial property in the Valley? Experts notice a slight loosening in the tight commercial real estate market, but don’t think it’ll get severe. Much also depends on Countrywide Financial, some experts say, which was hit hard by the home-mortgage crisis. What will the Calabasas-based company do with the office space, the majority of which it owns, that comes available after it makes its mountain of job cuts over the next three months? Will they lease it, sell it or leave it fallow? A ‘capital crunch’ Commercial real estate deals are taking longer to finish, and lenders are tightening their belts by refusing to lend to marginal investors, Valley experts say. “Lenders are not as willing to give a low-interest rate,” said Rickey Gelb of the Gelb Group, a commercial property leasing and management company in Encino. “They’ve become more nervous about refinancing a building and long-term financing.” Tom Festa, senior vice president of Grubb & Ellis in Sherman Oaks, said there has been a slowdown in both the office leasing market and the loans given to individual and institutional investors. “There is just not the pool of money to draw from,” Festa said. “It is a capital crunch.” Some analysts predict that the tight office-space market will loosen as businesses affected by the trickle down of the credit crunch downsize and sublease office space to other businesses. Gelb sees a softer commercial market emerging, resulting in a 1 to 2 percent increase over the next 18 months in available office space in the Valley. The Countrywide question A significant number of Countrywide employees in the Valley will be laid off as the company reduces its workforce by as many as 12,000 nationwide. Furthermore, Amgen will be reducing its headcount by at least 2,200 employees. The company employs 20,000, including 8,200 in Thousand Oaks. The result: More office space on the market. Since Countrywide, which has many offices scattered throughout the greater Valley area, owns most of its office property, what they do with it is a big question, Festa said. Countrywide may lease the property, sell it or, viewing the mortgage crisis as a blip, hang on to it to repopulate with employees when the mortgage crisis passes. Countrywide did not respond to calls by press time. Lower rents? Ray Howden, director of Cushman & Wakefield in Woodland Hills, predicts that office rents may do something they haven’t done in a very long time: decrease. “The landlords are really bullish and they are trying to ignore what’s going on out there,” Howden said. “The market is going to become a little more balanced.” But Sheryl Mazirow, president of Mazirow Commercial Inc. in Westlake Village, sees no loosening. Mazirow speculates that most of the property coming on the market will be sublease space, so property owners still will have no incentive to lower rents. It will remain a bonafide landlord’s market. There will still be limited supply and great demand, she said. Whatever happens, those interviewed remain optimistic. “The San Fernando Valley is basically a self-contained entity,” Gelb said. “We have enough jobs to keep one another busy.” Jamison buys in NoHo Jamison Properties has acquired an eight-story office building at the corner of Lankershim and Magnolia boulevards in North Hollywood. The property is part of a large complex that includes the Academy of Television Arts and Sciences. It is part of Jamison Properties’ purchase of six commercial properties for $125 million from an Orange County investor. NoHo Luxury Condos NoHo 14, which offers 14 floors of luxurious high-rise condominiums in the NoHo Arts District, is looking for buyers. The complex at 5445 Lankershim Boulevard includes a pool and spa, a fitness center, an entertainment room and a sun deck. Its ground floor will include retailers and restaurants. For more information email to livecolorfully@noho 14.com. The builder of NoHo 14 is JSM, headquartered in North Hollywood. The company specializes in innovative designs of mixed-use projects and is best known for constructing the contemporary apartments in downtown Santa Monica called the Santa Monica Collection. Westlake Village Fitness West Coast Sports Training has signed a five-year lease in a 5,100-square- foot building in Westlake Village, TOLD Partners, representing the sports company, said. Leasing the property is Olesky Family Trust. The single-story building is within a larger industrial park. It is easily accessible from Highway 101 and offers plenty of parking. The building will house the company’s corporate offices and sports training facilities. Senior Reporter Mark Barna can be reached at (818) 316-3123 or at mbarna@sfvbj.com .

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