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SPECIAL REPORT: ‘No Up Leg’ For Buyers Looking in Conejo Valley

If investors think they can turn to the Conejo Valley or the combined Simi Valley/Moorpark market for industrial buildings to put their cash into after selling something else, they better think again. Cabot Properties Inc. of Boston bought Peppertree Business Center, a 96,850-square- foot, Class B industrial building at 3850 Royal Ave. in Simi Valley on April 11 from Pacific Equity Properties for $7.6 million. Johnston Group in Agoura Hills bought the 114,487-square-foot Class A office building at 1000 Town Center Drive in Oxnard from Equity Office Management on March 21 for $23.1 million. Easy Street LLC of Santa Rosa Valley bought a 26,982-square-foot Class B industrial building at 5360 Commerce Ave. in Moorpark on March 18 from Malloy Family Partners LP for $4.4 million. 1240 Palmetto LLC in Santa Monica bought Camarillo Commerce Center, a 18,624-square-foot, two-property industrial park at 840 and 880 Avenida Acaso in Camarillo from Elevar Seven LLC on Feb. 9 for $5 million. Eight Five Three LLC in Camarillo bought a 25,491-square-foot industrial building at 853 Via Alondra in Camarillo from Vala Properties LLC on Feb. 17 for $3 million. Sales and leasing activity dropped during the first quarter to 222,700 square feet from the prior quarter of 230,200 square feet because of the lack of available space, said John DeGrinis, a senior executive vice president at Colliers International in Encino. Conditions were similar in the San Fernando Valley’s office and industrial markets, where investors have little or no choices in their next buildings to buy, so they aren’t selling. “There is no up leg, so they are not going to get rid of the down leg,” DeGrinis said. “The only opportunities are when we have estate planning, or deaths that force them to do something. Or there’s a breakup of partnerships – ones that were formed 20 to 30 years ago – and so age has something to do with it. The average person is not selling.” The Simi Valley/Moorpark dual market has a vacancy rate of 5.9 percent, a sharp fall from a 10 percent vacancy a year ago for the same period, according to Colliers data. Just last quarter, the rate stood at 7.8 percent. But even 5.9 is high vacancy compared to nearby industrial markets, which have vacancy rates around 1 percent. Simi Valley/Moorpark reported a higher vacancy rate because of four vacant buildings that together account for about 650,000 square feet, DeGrinis said. Otherwise, the rate would be closer to 2 percent, he added. Those large buildings don’t fit into the market’s sweet spot of 30,000 square feet to 50,000 square feet, he said, so they aren’t filling up. Only one building in the smaller size range in available in the market, he added. “So we’re hyper, hyper tight,” DeGrinis said. The bigger buildings are not as popular in the North L.A. region market because companies here service the local community, rather than much larger areas, he added. In the Conejo Valley’s 7.2 million square foot industrial market, the vacancy rate for the first quarter was only 0.1 percent, based on Colliers data. That’s down from 2.4 percent a year ago. Asking rents are 79 cents a square foot, a slight rise from a year-ago rate of 74 cents. “There are no buildings until you get to the Oxnard Plain and Camarillo,” De Grinis explained. DeGrinis forecasts activity will push out even beyond the Valley and Ventura County to the Tejon Ranch and Antelope Valley areas, as space is now tight even in the Santa Clarita Valley. Office space in the Conejo Valley took a turn for the worse in the first quarter, as the vacancy rate continued to ratchet up from last quarter. Over the three-month span, vacancies rose to 16.2 percent, up from 15.7 percent last quarter and 14.8 percent a year ago. The submarket also experienced a second consecutive quarter of negative net absorption of 31,700 square feet. Asking rents also dropped to $2.14 a square foot from $2.19 a year ago and $2.23 during the prior quarter, according to Colliers. – Carol Lawrence

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