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REAL ESTATE QUARTERLY: Office Market Returned Space While Industrial Scene Remained Flat

-A two-story, 101,136 square-foot-office building at 177 Holston Drive in the Lancaster Business Park sold in July for $5.6 million. The buyer was Charter School Capital of in Portland, Ore., and the seller was L.A.’s Rising Realty Partners. The building is leased to charter school network operator Learn4Life. -A 37,364-square-foot retail building at 10 West Plaza at 40125 10th St. West in Palmdale sold in September for $12.6 million, or $337 per square foot, to 10th Street Palmdale. The building, constructed in 2008, is fully leased with tenants including Butler’s Coffee and Michael Anthony Salon & Spa. -Budget hotel Knights Inn at 130 E. Palmdale Blvd. in Palmdale was sold in July for $3.9 million, or $104 a square foot. The seller for the hotel, built in 1973, was Colton’s Palmdale Motel Management Inc. and the buyer was Altadena’s Greenland Symmetry. -Apartment complex the Arches at Regional Center West, at 570 Knollview Court in Palmdale, sold in July for $7.7 million, or $53,597 a unit. Built in 1987, the complex offers two- and three-bedroom apartments with amenities including a pool and barbecue area. The seller was PMSRE Palmdale and the buyer was L.A.’s CC Knollview. -Senior mobile home community Leisure Lake Estates, 48303 N. 20th St. West in Lancaster, sold in August for $12.7 million. The sellers of the 211-unit property were Lancaster Summit Properties Ltd. and Goodyork Corp. It was purchased by Keith Management of Chandler, Ariz. The Antelope Valley was a tale of two markets during the third quarter. In the office market, one of the largest vacant buildings in Lancaster got a new owner and a new tenant, and despite a number of additional small deals, the vacancy rate ratcheted up. Meanwhile, the market for industrial properties held steady. The office vacancy rate hit 9.9 percent in the quarter, according to data from Colliers International, a spike from 8.6 percent in the previous period. That compares with a vacancy rate of 8.8 percent a year ago. The asking price remained nearly flat compared with the previous quarter’s $1.69 a square foot. The industrial vacancy rate in the third quarter, on the other hand, was at 4 percent, just about flat with the second quarter’s 3.9 percent, according to Colliers. The square-foot asking price remained at 44 cents in the third quarter, the same as the second quarter. Tristan Greenleaf, a broker in the Valencia office of NAI Capital Inc., said the office market in the Antelope Valley is challenging because it is difficult to bring large national names to north Los Angeles County. The big drivers of the office market are government-related users, such as municipalities and the school district. “Medical continues to do OK but not as aggressive in its expansion as government-based uses,” Greenleaf said. One of the bigger deals during the quarter was a 100,000-square-foot, two-story building at 177 Holston Drive that had previously been used as a call center by Bank of America Corp. In July, Rising Realty Partners sold the building in the Lancaster Business Park to Charter School Capital, a Portland, Ore., firm that provides financing and facilities support to charter schools. The entire building has been leased for the corporate offices and some learning space by Learn4Life, a nonprofit consortium of charter schools in California. Rising purchased two buildings, at 177 and 176 Holston Drive, in 2013 from Bank of America as part of a 1.75 million-square-foot, $200 million portfolio of 10 office buildings. The Charlotte, N.C., bank inherited the real estate portfolio when it bought out defunct mortgage lender Countrywide Financial Services of Calabasas in 2008. Rising still owns the other building. Typical small deals during the quarter included the sale of an 8,900-square-foot warehouse at 632 Rancho Vista Ave. East in Palmdale to Telesis Collision Center for $730,000, and the sale of a 1,888 square-foot-retail building at 45223 Trevor Ave. in Lancaster for $750,000. Another sale involved the Knights Inn motel in Palmdale for $3.9 million and a five-tenant retail center in Palmdale for $12.6 million. The retail picture in the Antelope Valley has proved strong, particularly near the mall in Palmdale. On Oct. 15, the first stand-alone Chik-fil-A restaurant opened in Palmdale, located in a shopping center that opened earlier this year on a 5-acre parcel at 730 W. Rancho Vista Blvd. Other tenants at the center include grocer Aldi; Dunn Edwards Paint; and eateries Krispy Kreme, Yogurtland and the Habit. Vincent Roche, senior director in the Bakersfield office of commercial real estate brokerage Cushman & Wakefield Inc., said retail in the region has been tight when it comes to vacancies. He has been working on the early stages of selling some vacant parcels for new projects that won’t get started until next year. “It is hard to get a location if you are looking for an existing building,” Roche said. “There are pieces of (empty) land available around the mall.” – 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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