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Friday, Jan 27, 2023
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Brokers Like What They See in the Valley Despite Weak Quarter

The San Fernando Valley office market gave back 24,600 square feet in the fourth quarter, erasing some of its third-quarter gains – but the region saw robust activity and appears to be on strong footing for the year. The overall vacancy rate edged up a tenth of a point to 14.5 percent, according to the L.A. office of Colliers International. But it was down a full percentage point from a year earlier, perhaps owing in part to the $2.17 asking rate, which was 10 cents less than fourth quarter 2013. Some notable sales occurred in the East Valley, where billionaire Alfred Mann sold the 10-acre Sylmar Biomedical Park. It was picked up in November along with the 120-acre Mann Biomedical Park in Valencia by a Los Angeles joint venture. Two smaller deals demonstrated the heightened demand in the East Valley, the quarterly leader with 35,800 square feet absorbed. A 12,500-square-foot Studio City retail center, at Ventura Blvd. and Whitsett Ave., sold in December. Word on the street is that Barry R. Silverman, West Hills principal of M.B. & S. Silverman LLC, got close to the $13.5 million asking price. That means buyer Hans Hirth LP, a Vista trust, paid around $1,000 a square foot, which may be a record. Longtime Valley broker Adam Christofferson, first vice president and regional manager in the Encino office of Marcus & Millichap, wasn’t involved in the deal. But he can recall clients balking at paying more than $100 a foot, not so many years ago. “A thousand a square foot is really high in the San Fernando Valley,” he said. The other sale was – of all things – a 41-year-old defunct carwash on just over half an acre in Valley Village. The buyers paid $3.65 million, or $866 a square foot, for the parcel at 12444 Chandler Blvd. The buyers plan to develop the property, which is on the Orange Line bus route. “We had 18 offers and close to 500 calls on the listing,” said Stacy Vierheilig-Fraser, senior managing director at Charles Dunn Co. Inc. The Central Valley submarket also had a good quarter, with 18,000 square feet taken off the market and vacancy falling to 9.3 percent, down four-tenths of a percentage point from third quarter and back to the same place it was at one year ago. The West Valley, the weakest submarket for years, was again the laggard, with 78,400 square feet returned by tenants. The submarket’s vacancy rate edged back up to 16 percent after falling to 15.4 percent in third quarter. Average asking rates fell to $1.94. Despite the weakness, Matthew Heyn, senior vice president in the Los Angeles North office of CBRE Inc., said deals came together in December that will be finalized early this year. “Our numbers were pretty flat but this was a continuation of a fairly positive year,” he said. He cited Universal Music Group’s decision to stay in Warner Center after the company was forced out of its Farmers Insurance sublease last year. “That was a big deal to keep them out there. It was an experiment for them to go into the West Valley and obviously it worked for them,” he said. On the industrial side, demand is way up and vacancy rates are down to single digits across the Valley. “The bad news is that the tight markets have become problematic. Companies that are growing out of garages and small, multi-tenant buildings just can’t find space,” said Patrick DuRoss, vice president at the Encino office of Colliers International. – Karen E. Klein Main Events A joint venture of Valencia-based Intertex Cos. and Oaktree Capital Management L.P. of L.A. purchased the 10-acre Sylmar Biomedical Park in November for an undisclosed price. The deal was part of a two-property $112 million sale by biotech billionaire Alfred Mann. The second property involved was the 120-acre Mann Biomedical Park in Valencia. A two-property office portfolio in Chatsworth, totaling about 73,000 square feet, was sold for $10 million in November to independent video game developer Respawn Entertainment. The creator of popular video game Titanfall plans to move its headquarters from Van Nuys to the two properties, at 20131 Prairie St. and 9301 Winnetka Ave. The buildings were 5 percent leased at the time. A Newport Beach real estate investment firm, Peregrine Realty Partners, spent $19.5 million in December to purchase a 92,500-square-foot Class A office building at 5950 Canoga Ave. The property dates to 1985. It was sold by Long Wharf Real Estate Partners LLC, a Los Angeles investment group. The sales price puts the deal at close to $211 a square foot. In October, Bobrick Washroom Equipment Inc. sold its longtime North Hollywood headquarters at 11605-11611 Hart St. to Selective Real Estate Investments of Encino. The washroom fixtures outfit, founded in 1906, is leasing back the buildings totaling 82,660 square feet until its build-to-suit headquarters at 6901 Tujunga Ave. is completed later this year. The sales price for the Class C industrial buildings was about $7.65 million, or $92.55 per square foot. Tax Resolution Services, a debt-negotiation service, leased more than 10,600 square feet at 6345 Balboa Blvd., Encino. The company is slated to occupy two floors beginning in March. The building, part of the Encino Office Park adjacent to Lake Balboa, was 97 percent occupied at the time of the lease. Property owner Moss Group of Encino closed the deal for $2 per square foot. San Fernando Valley Office Market At a Glance Inventory 21.8 million square feet Under Construction 0 Class A Asking Rents $2.17

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