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SPECIAL REPORT: Industrial Tightens, Office Loosens in High Desert

The industrial market in the Antelope Valley continued to show strength in the first quarter as rental prices remained high and the vacancy rate low. Office vacancies, however, increased from where they were a year ago, hovering just above 19 percent. Six office buildings making up Woodland Business Park, 1609 E. Palmdale Blvd., in Palmdale were sold for $4.9 million in March. The buyer was Roy Medical Group and the seller was Martin Properties Inc. The buildings, constructed in 1985, total 45,609 square feet. Retail center Challenger Plaza, 1004-1048 E. Avenue K, in Lancaster, sold for $3.2 million in January. The buyers were Rami Dorghalli and Ibrahim Nakoud, both of Lancaster, and the sellers were Arek and Erez Chaim of Beverly Hills. The 24,052-square-foot structure was built in 1989. Antelope Valley College leased 50,701 square feet for its Palmdale campus at 2301 and 2279-A E. Palmdale Blvd. in Palmdale. Lease rates were not disclosed. The property is owned by Abbey Co., a private real estate investment and management firm. Ahi Hawaiian BBQ has signed a lease to take 1,440 square feet at Gateway Center at 1823-K E. Palmdale Blvd. in Palmdale. The owner of the property is Palm-Gateway SC in Calabasas. The lease rate was not disclosed. Dragon Han Martial Arts has signed a lease to take 1,690 square feet at Palmdale Village, 2321 E. Avenue S, in Palmdale. The owner of the property is 5310-11 93rd Street in Marina del Rey. Harvey Holloway, a broker with Coldwell Banker Commercial Valley Realty in Lancaster, said that industrial space has done better than office because of the lack of product. “We are having more difficulty finding property (to show),” Holloway said. “We used to have quite the inventory to show anyone who was interested.” The industrial vacancy rate in the first quarter was at 2.1 percent, down significantly from the 4 percent rate in the same period a year earlier, according to data from Colliers International. The square-foot asking price was 51 cents a month, an increase of 7 cents from the first quarter last year. Tristan Greenleaf, a broker in the Valencia office of NAI Capital Inc., put the asking price higher, however, in the range of upper 70 cents to lower 80 cents. Greenleaf also said that he was already fielding calls regarding space for potential suppliers to the new Air Force bomber to be assembled by Northrop Grumman Corp. in Palmdale. The estimated $60 billion contract awarded last year to Northrop, based in Falls Church, Va., will be a big boost to the industrial market, Greenleaf said. “The benefit to your average landlord is all of the third-party vendors serving the contract and providing any type of widget, logistics or tooling of any sort will need space,” he added. Both Holloway and Greenleaf characterized the office market as weaker compared with the industrial market. “The interest we’ve have had is in industrial rather than office,” Holloway said. In the office market, the vacancy rate was 19.4 percent in the quarter, up 2 percentage points from the same period a year earlier, according to Colliers. The asking price was $1.67 a square foot a month, or just about the same as in the prior year when it was $1.68 a foot. Greenleaf said that postrecession there has been a different approach to how companies are handling their office space needs that places a premium on creative common space and less on individual offices that take up more room. “A big part of that is how do we use space most efficiently to create positive employee morale and the best functional layout for getting stuff done,” he added. – 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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