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Wednesday, Dec 6, 2023

Valley Makes Big Comeback After Disheartening Second Quarter

If you listened closely enough, the collective sigh of relief among San Fernando Valley brokers was likely audible in the third quarter. The office market absorbed 178,300 square feet –a huge improvement over the second quarter when just 3,200 square feet was taken out of play, according to data from the L.A. office of Colliers International. “2012 was pretty decent and last year was pretty decent and this year is definitely better,” said Stacy Vierheilig-Fraser, senior managing director at Charles Dunn Co. Inc. The vacancy rate reflected it, falling nearly a point to 14.4 percent. Still, the Valley’s overall asking rate increased just two cents to $2.18 a square foot. And that was 8 cents lower than the year-ago period as landlords attempt to attract cost-conscious tenants – a strategy that does seem to have accelerated growth in the submarket. “Landlords don’t want to be super aggressive,” Vierheilig-Fraser said. “We’re still seeing some free rent but not as much as we used to.” The West Valley, which had been the weakest for several years, absorbed the largest amount of space at 98,500 square feet. Its vacancy rate slid more than half a point to 15.4 percent. Landlords increased asking rents 2 cents to $2.17 a square foot. The absorption occurred despite two major downsizings. An outpost of West Sussex, England telecommunications firm Spirent Communications Plc took about a quarter less space when it moved into 83,000-square-feet at 27349 Agoura Road in Calabasas about a half-mile away from its previous building. Value of the 10-year deal with landlord Liberty Canyon Technology was not disclosed. And United Online Inc. reduced to 29,000 square feet at 21255 Burbank Blvd. in Woodland Hills from about 111,000 square feet nearby. Value of that six-year lease with LNR Property Corp. was not disclosed. Meanwhile, the Central Valley continued to enjoy the market’s lowest vacancy rate. It dropped nearly a full point to 9.7 percent as tenants took 41,600 square feet. Many tenants were attracted by the competitive asking rents, down one cent to $2.13 square feet, the lowest in the Valley. Among the deals there, Champs Charter High Schools of the Arts moved into an additional 37,500 square feet at 6842 Van Nuys Blvd., owned by Martin Groupe Inc. The school occupies multiple buildings around Van Nuys. “There’s growth locally with a lot of expansion, mostly in Warner Center, Sherman Oaks and Encino along Ventura Boulevard,” said Michael Soto, research manager at the downtown office of Transwestern. “It’s mostly professional business services, some health care firms and some non-profits and law firms.” Still, the East Valley, which has been a favorite of new media and entertainment firms, showed dramatic improvement. Its vacancy rate dropped 1.5 points to 16.6 percent as it absorbed 38,200 square feet. Rates were $2.31 a square foot, up two pennies from the previous quarter but down a whopping 39 cents from a year-ago. – Jacquelyn Ryan Main Events A Warner Center luxury apartment building that opened last November has been sold for $95 million. The 298-unit Alta Warner Center at 6701 Eton Ave. was sold by Wood Partners of Atlanta, the original developer, to Crow Holdings of Dallas. The building is a mix of one- and two-bedroom apartments and is adjacent to the Metro Orange Line busway. Wood Partners spent about $75 million on the development. The Marriott Warner Center was purchased in July by Laurus Corp., a Century City real estate investment and development company, for close to $90 million. The company acquired the 474-room corporate lodging at 21850 Oxnard St. from the Teachers Retirement System of Illinois – which acquired the hotel for $85.3 million in 2003. Rexford Industrial Realty Inc. purchased a 320,000-square-foot industrial building at 9120 Mason Ave. in Chatsworth for $30.5 million in cash from LBA Realty LLC in Irvine. The building is fully leased to Northstar Moving Corp. and Cosmetic Laboratories of America Inc. through 2020. Spirent Communications Inc. signed a 10-year lease with Los Angeles landlord Liberty Canyon Technology for 83,000-square-feet at 27349 Agoura Road in Calabasas. It is one of the American outposts of Spirent Communications Plc, a publicly traded telecommunications firm based in West Sussex, England. The company downsized from 107,000 square feet about a half mile away. Jiselle Properties Inc. of Sherman Oaks purchased 4-acres in Van Nuys for $23.5 million in July. The property at 6161 Sepulveda Boulevard is on a 20-year lease to LA Fitness, which opened the 53,000-square-foot gym last year. The land was purchased from Michael Lepore of Arlington, Wash. Last month, United Online Inc. moved into substantially smaller offices in Woodland Hills. After the successful spinoff of flower-delivery service FTD Cos. Inc. late last year, the company moved into about 29,000 square feet at 21255 Burbank Blvd. in Woodland Hills, just a few steps from its longtime headquarters at 21301 Burbank Blvd., where its lease for about 111,000 square feet expired. United Online signed a 6-year lease with landlord LNR Property Corp. of Newport Beach. San Fernando Valley Office Market At a Glance Inventory 21.8 million square feet Under Construction 0 Class A Asking Rents $2.18

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