Real Estate Quarterly: Tenants Holding Steady as Industrial, Office Projects Still on Horizon

0

There’s a lot of wait-and-see going on in the Santa Clarita Valley. A lack of supply in both the industrial and office sectors has kept many tenants waiting to expand or relocate to its business- and bank balance-friendly confines.

Several projects are slated to address a need for big blocks of commercial space craved by both industrial-flex users and office tenants, but they remain tantalizingly out of reach.

“Gateway V is in plan check for its four buildings, ranging from 60,923 square feet to 254,890 square feet, and will start construction on two of those buildings once they receive final approvals,” said Craig Peters, executive vice president with CBRE. Those buildings will be Class A industrial and offered for sale or lease.

Sterling Gateway is still in planning, and Needham Ranch continues to finalize its plan for a first phase of approximately 50 acres that should break ground early next year.

“The new buildings will offer state-of-the-art product and should attract companies from the greater San Fernando Valley, which is challenged by both a lack of available buildings and largely functionally obsolete product,” Peters said.

According to data from Jones Lang LaSalle Inc., vacancy in both the North Los Angeles County and San Gabriel Valley industrial markets is tight, coming in at 4.2 percent and 3.2 percent, respectively, for the third quarter. Asking rents were 66 cents and 54 cents a square foot for the period.

“While the new product planned to be delivered in late 2015 will help,” Peters said, “there will continue to be a supply-and-demand imbalance until those buildings start to be delivered. We anticipate lease rates and sale prices to continue to rise as companies compete for the limited available space.”

Unfortunately for office users, the planned projects are focused on industrial and flex space.

“We will, in 2015, certainly see some new construction occur in the industrial-flex component,” said Ryan House, a vice president at JLL. “But will anybody build in 2015 on the office side?”

Vacancy has been steadily declining as tenants soak up available space, particularly in the top buildings. At the close of the third quarter, vacancy was 15.3 percent, down from 16 percent in the prior quarter. More than 19,000 square feet were taken off the market, a stark reversal from the nearly 13,000 square feet put back into circulation in the second. Average asking rates were $2.37 per square foot, down from $2.40 in the previous quarter but similar to the $2.36 of one year ago.

“That little bit of positive absorption was primarily comprised of smaller suites absorbed in various buildings,” House explained. “I anticipate that trend to continue based on what I’ve seen in the market.”

Until there’s more capacity, he said, the numbers will hold pretty steady.

“Right now, there’s a lull in large-tenant activity because we don’t have new office construction under way and no large blocks on market. I don’t anticipate swings either way in vacancy over the next 12 months.”

– Margot Carmichael Lester

Santa Clarita Valley

Lamsco West Inc. leased the 75,055-square-foot Class A building at 29101 The Old Road in the Valencia Commerce Center for $6.3 million for 10 years. The company will relocate from a smaller building in the Valencia Industrial Center.

The Joan Kelso Family Limited Partnership and the Arnold & Caylene Gustin Living Trust sold a 6-acre, two-property parcel at 24935 Avenue Kearny in Valencia to Rexford Industrial for $11.5 million.

Santa Clarita Studios renewed its lease for a 69,800-square-foot Class B building on Avenue Kearny in the Valencia Industrial Center. Terms were not disclosed. The independent studio is home to 10 soundstages and production offices, and shows such as TNT’s “Franklin & Bash” and FX’s “Justified.”

Two hotels at 27513 Wayne Mills Place in Valencia were purchased out of receivership in a $21 million transaction. Trigild Management Services Inc. sold the Best Western and the Holiday Inn Express, which totaled 238 rooms, to Excel Hotel Group for $88,235 per room.

Arnel Commercial Properties sold the Village at Seco Canyon shopping center at 27983 Seco Canyon Road in Santa Clarita to SOC-Seco for $13.3 million, or $317.44 per square foot. The center was 86 percent leased at the time of sale.

No posts to display