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REAL ESTATE QUARTERLY: High Desert’s Low Vacancy Could Mean Rising Industrial Rents

-A 130,000-square-foot manufacturing building in Palmdale sold in May for $6.4 million to Brainerd, Minn.’s Bang Printing, which has local operations in Valencia. The property, at 600 W. Technology Drive, went for $49.23 a square foot. Steven and Ellie Campbell of Newport Beach were the sellers. -A retail building in the Lancaster Commerce Center at 1220 Avenue K was sold in May for $19.3 million. The tenant in the 62,216-square-foot space is 24 Hour Fitness, which has a lease through December 2023. The buyer was Spirit Realty Capital of Scottsdale, Ariz., and the seller was Santa Ana’s Red Mountain Asset Funds II. -A 11,200-square-foot medical office building at 1741 W Avenue J in Lancaster sold last month for $1.6 million, or nearly $150 a square foot. The building is fully leased to Hull Eye Center. The buyer was R. & GS Sampson Living Trust in Whittier; the seller was SN & SB Hull Trust. -Investor Stephanie Smith paid $1.2 million in April for a Palmdale industrial building at 38905 10th St. East. The 29,204-square-foot building, built in 1982, went for $43 a square foot. The seller was Michaels Land Development in Prescott, Ariz. -Restaurant chain PizzaRev signed a lease for 1,500 square feet in Palmdale’s Shops at Rancho Vista Gateway at 748 W. Rancho Vista Blvd. The landlord is Rancho Vista Gateway. -Dr. Austin Ma signed a lease for 1,188 square feet of office space in the Sixteen Street Plaza in Lancaster. The property, at 44404 16th St. West, is across the road from Antelope Valley Hospital and is owned by 44404 Associates. The office and industrial markets in the Antelope Valley showed signs of life during the second quarter, bolstered by activity in Palmdale including medical office buildings opening and the sale of one of the area’s largest vacant properties. In Lancaster, meanwhile, there were sales of several smaller industrial buildings. A lower vacancy rate in the industrial market means landlords are looking to raise rental prices, whereas the office market is improving but not at the same pace, said Harvey Holloway, with Coldwell Banker Commercial Valley Realty in Lancaster. “We have more office vacancy out there and the rental rates do not have the same pressure,” he said. Data from Colliers International paints a similar picture. The vacancy rate for office property in the Antelope Valley in the second quarter was 8.6 percent, a slight increase from 8.4 percent in the previous quarter. That compares with a vacancy rate of 9.6 percent a year ago. The asking price remained flat quarter to quarter at $1.71 a square foot. The industrial vacancy rate in the second quarter, on the other hand, was at 3.9 percent, just about flat with the first quarter’s 4 percent, according to Colliers. The vacancy rate was down from the 4.4 percent of a year ago. The square-foot asking price remained at 44 cents in the second quarter, the same as the first quarter. The biggest sale in the submarket involved a 130,000-square-foot manufacturing building in Palmdale at 600 Technology Drive that has been vacant for about two years. The property, one of the largest in the area, was purchased for $6.4 million by Bang Printing of Brainerd, Minn., which will be relocating its Valencia book and catalog printing operations there. During the quarter, Coldwell’s Holloway sold two industrial buildings in Lancaster. In April, an investor paid $1.2 million for a 29,200-square-foot building at 38905 10th St. East, which will be used to ship packages for a retailer. In June, he handled the $1.4 million sale of a 22,000-square-foot building at 811 Columbia Way for a manufacturing company. Charles Hoey of Charles Hoey and Associates believes the industrial market has dwindling prospects until new construction brings up-to-date space to the market. Projects in the works include buildings of 40,000 square feet, 26,000 square feet and 15,000 square feet. “If those all come up, we will have something to work with,” he said. In the office market, three new medical office buildings in Palmdale from Toneman Development contributed to the vacancy rate uptick. The properties, at 38910 Trade Center Drive, came on the market last month. One building holds 9,100 square feet while the other two offer 7,500 square feet each. They are close to the Palmdale Regional Medical Center and available to own or lease. “They are not a great size, but they are in a great location,” said Holloway, the broker for the properties. Tristan Greenleaf, a broker in the Valencia office of NAI Capital Inc., said he is receiving multiple offers for leasable space, a trend he has not seen since before the 2008 recession. Also, a lot of interest is coming from parties outside the Antelope Valley, mostly in regions where the availability of buildings is constricted. “I am getting folks not bound by location and it makes sense for the economics of the deal to come up here,” he said. – Mark R. Madler

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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