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Friday, Jan 27, 2023
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Tenants High and Dry in High-Desert Market Lacking Choices

Division Campus LLC in Lancaster spent $4.4 million to buy four industrial buildings totaling 68,000 square feet in the Lancaster Business Park. The buildings at 156 East Avenue K-6, 212 East Avenue K-6, 145 East Avenue K-8 and 209 East Avenue K-8 were constructed in 2005 and went for $68 a square foot. The seller was Campus Business Park II LLC. U.S. Tool Grinding Co., in Farmington, Mo., leased 22,000 square feet for five years at 63 cents a square foot a month in a building at 357 E. Avenue K-8, Lancaster. The landlord is Landlord Campus Business Park Three LLC. A 14,000-square-foot office building at 514 Commerce Ave., Palmdale was sold in January for $205,000, or $15 a square foot. The buyer was Commerce Avenue Partners and the seller PLG Holdings LLC in Escondido. Gym Planet Fitness signed an 11-year lease for 20,208 square feet at 44410-44600 Valley Central Way, Lancaster at 83 cents a square foot. The building is owned by Merlone Geier Management in San Francisco. Another gym, Universal Fitness, signed a lease for 19,120 square feet in the Towne Square East strip center at 2160 Palmdale Blvd., Palmdale. The building, constructed in 1989, is owned by Ophir Management Services in Encino. Palmdale Promenade, a 96,352-square-foot shopping center at 412 W. Rancho Vista Blvd., sold for $9.3 million, or about $96 a square foot. The 5.5-acre center is anchored by Home Depot, Burlington Coat Factory and 99 Cents Only stores. Built in 1991, the property is 82 percent occupied. There was little activity in the Antelope Valley industrial market during the quarter despite the economic recovery – for good reason. There simply is little desirable product available. Only 25,100 square feet of space was either sold or leased and the vacancy remained unchanged at 4 percent, according to data from the Los Angeles office of Colliers International. And while monthly asking rents also held steady at 44 cents a square foot, brokers in Lancaster and Palmdale anticipate that prices will rise due to the low vacancy. “We are going to see more pressure on pricing this year,” said Harvey Holloway, with Coldwell Banker Commercial Valley Realty in Lancaster. He noted that while older metal buildings are going for 45 to 50 cents a square foot, more modern concrete tilt-ups are asking 65 to 70 cents. Charles Hoey, a longtime Antelope Valley broker who is principal of Charles Hoey and Associates, said that the owner of an older mixed-use industrial building on the north side of Lancaster was testing the market at 80 cents a square foot. “I don’t know if he is going to get that or not,” Hoey said. But rather than wait for developers to put up new buildings, Hoey is stepping his toe into development himself. He is a partner in two projects, one at the Lancaster Business Park, the other in Palmdale. The Lancaster project already has a tenant interested in taking an entire 24,000-square-foot building, though not for an industrial use. “Until people start building there is no place for anyone to go,” Hoey said. Tristan Greenleaf, a broker in the Valencia office of NAI Capital, said that many tenants will be surprised when they start looking for space in the Antelope Valley. “I think there is a mindset among tenants that the market is still where it was two years ago, however they are finding there is not as much available,” he said. During the quarter, Greenleaf handled a five-year lease of a 22,000-square-foot building in Lancaster at 357 E. Avenue K-8 for U.S. Tool Grinding Co. The rent was 63 cents a square foot. And in late March, he brokered the $4.4 million sale of four adjacent buildings totaling 68,000 square feet at the Lancaster Business Park. The 1.3 million-square-foot office market, meanwhile, also was quiet with 1,337 square feet put back on the market. The vacancy rate was flat at 9.1 percent, though landlords bumped up their asking rates by a penny to $1.80 a square foot. In the retail market, one new project opened at 730 N. Rancho Vista Blvd. in Palmdale. The 5-acre center features tenants including grocer Aldi, Dunn-Edwards Paints and eateries Chick-Fil-A, Krispy Kreme, Yogurtland and The Habit. The center is being built in phases by Fountainhead Development of Newport Beach. Palmdale Promenade, a 96,352-square-foot shopping center at 412 W. Rancho Vista Blvd., changed hands for $9.3 million, or about $96 a square foot. The 5.5-acre center is anchored by Home Depot, Burlington Coat Factory and 99 Cents Only stores. The seller was Richard Goldstein of MG Development Co. in Woodland Hills, according to real estate data firm CoStar Group Inc. The buyer is a private L.A. investor. – 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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