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Tuesday, Nov 28, 2023

SPECIAL REPORT: Sales Offset Slow Lease Quarter for Santa Clarita

Activity was flat in the Santa Clarita Valley’s office market during the fourth quarter of 2015. The vacancy rate fell incrementally to 15.1 percent for the quarter compared with 15.2 percent the prior period, according to data from Colliers International. Real Estate Property Services in Acton purchased a 20,415-square-foot Valencia office building at 24971 Avenue Stanford for $2.4 million, or $118 a square foot, from Heartland Precision Fasteners Inc. in New Century, Kan. Lorena and Francisco Sanchez of Sylmar purchased a 7,780-square-foot Santa Clarita office building at 24400 Walnut St. for $1.67 million, or $215 a square foot, from Adly Abdelmalek Trust. Tenants include El Pueblo Bakery & Restaurant and NV Landscape. CDS Investments in San Fernando purchased a 45,536-square-foot Santa Clarita industrial warehouse at 17341 Sierra Highway for $4.48 million, or $98 a square foot, from Sierra Highway Holdings of Los Angeles. Jssk in Stevenson Ranch purchased a 47,916-square-foot Comfort Suites Hotel at 25380 The Old Road in Newhall for $13.4 million, or $279 a square foot. Valencia mortgage company Pacific Funding purchased a 20,731-square-foot building at 27433 Tourney Road for $6.1 million from JSB Development Inc. of Valencia and McCombs Inc. of Ventura. Pacific Funding plans to use more than half of the property as its company’s headquarters. The sale price amounted to nearly $295 a square foot. Tenants absorbed only 2,200 square feet of office space in a market with more than 2 million square feet of inventory in the quarter, significantly less than the 10,600 square feet picked up in the previous quarter. According to Bob Khalsa, president of United America Realty in Newhall, a few large vacant buildings can skew the numbers in a small market. So for small businesses looking for space, the effective office vacancy rate is probably about 8 percent to 10 percent. He said most tenants are looking for leases in the 200- to 1,000-square-foot range and pickings are slim. “The pressure on office has actually increased tremendously from small-business owners,” said Khalsa. “I’ve seen a dramatic increase in the past two years and we don’t have many of these spaces available in the entire city.” As for rates, Santa Clarita Valley landlords are charging about $2.29 a square foot, or 7 cents more than the weighted asking rent for the San Fernando Valley, and 6 cents more than rent in the Conejo Valley, according to Colliers. “Fewer deals are happening because there is a shortage of inventory,” said Robert Stratton of Stratton Industrial Commercial Real Estate Services Inc. in Santa Clarita. “It’s made relocating businesses more difficult.” Office building sales showed more activity during the quarter. Real Estate Property Services in Acton purchased 24971 Avenue Stanford, a 20,415-square-foot office building in Valencia, for $2.4 million, or $118 a square foot. The seller was Heartland Precision Fasteners Inc. in New Century, Kan., a company that produces structural fasteners for the aerospace industry. Also, Lorena and Francisco Sanchez of Sylmar purchased a 7,780-square-foot building at 24400 Walnut St. in Santa Clarita from Adly Abdelmalek Trust for $1.67 million, or $215 a square foot. In contrast to the office scene, the region’s industrial market continues to offer few space options, with the vacancy rate at 2.7 percent in the fourth quarter, compared with 4.5 percent just a year ago. “For industrial real estate, it’s probably been the record low for vacancy rates,” said Yair Haimoff of NAI Capital in Santa Clarita. “I would say high activity in the San Fernando Valley drives the secondary Santa Clarita market. People from the San Fernando Valley move to the Santa Clarita Valley because there is no product out there.” As for tenants, United America’s Khalsa is seeing more Chinese and Vietnamese businesses buying industrial space for production. He also said that U.S. investors are buying up bigger warehouses to lease to businesses. “I think you are going to see higher demand for large spaces for warehousing,” said Khalsa. – Stephanie Henkel

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