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Friday, Mar 29, 2024

Industrial Market Shine Slightly Worn in Quarter

The industrial sector remains just about the only bright spot in the Valley’s real estate picture for the first quarter of 2008, according to a recently-released Colliers International Market Report. That’s not to say it’s all good news. Sales and leasing activity for the period was 31 percent lower than the last quarter of 2007, even though, or perhaps because, the total vacancy rate is holding steady at a very tight 3.3 percent. “The vacancy we have lived with in past few years, sub-4 percent, has been more problem than good,” said Colliers’ John DeGrinis. “It really has hampered growth because there is so little space available.” What few sales there were showed a price increase, up 15.4 percent in the first quarter of 2008 versus the same period in 2007. Owners who may be thinking of selling are taking their time in evaluating what DeGrinis termed “very aggressive” offers. “The average industrial building owner, whether they are an investor or what have you, is still is coming to grips with the fact their building is not worth what it was six months ago,” he said. From 2005 to 2007, there was a dramatic value appreciation, upwards of 40 percent in some areas. “People seem to forget that their building is still worth a lot more now than it was just four years ago.” Office Market Tarnished The first quarter was the third in a row of negative net absorption for the office market, according to Colliers, with West Ventura County seeing the greatest surge with nearly a quarter of its office space sitting vacant. They are trailed by the Santa Clarita and West San Fernando valleys where vacancy rates have climbed to 16.9 percent and 11.6 percent, respectively. I asked Mike Catalano, senior vice president of Studley whether we were looking at a period that might rival the early 90s. “It’s hard to say that the market is similar to that market at all,” he said, explaining that the hits taken by the lending industry have had a “dramatic impact” on the region. In the 90s, a sort of perfect storm hit the Valley: huge numbers of aerospace jobs left the area all at once; there was the savings and loan debacle; plus we had riots, fires and even an earthquake thrown in for good measure. According to Catalano, even the lending industry space contraction will likely not be widespread, confining itself pretty much to the West Valley and Orange County. He also reminded us that real estate data lags by up to six months, with deals signed six months ago not being reported until now. “Typically the first sign is we see concessions rising without rental rates dropping and that is happening in all markets,” said Catalano. “In a market trending downward, landlords are sort of the last ones to acknowledge the trend by lowering (rental) rates.” So while vacancy rates are expected to increase modestly throughout the year across the Valley, Catalano said, we may soon see rental rates decline, hopefully bringing much-needed equilibrium to the market once again. The Colliers International report numbers encompass the West Ventura County and the Santa Clarita and San Fernando valley markets. Industrial Building Sold Parker Industrial Properties sold its 50,620-square-foot industrial building located at 20630 Nordhoff St. in Chatsworth for $6.8 million to an unnamed buyer who will occupy the R & D; building as an owner/user. Tim Foutz of NAI Capital’s Encino office represented the seller and the buyer was represented by Jesse Laikin of Lee & Associates-South Bay. Retail & Apartments Encino-based Investment Real Estate Associates represented the buyer of The Agoura Village Shopping Center in a transaction valued at $7.7 million. The 19,380-square-foot building at 29020 Agoura Road in Agoura Hills was built in 1991. IREA brokers handling the deal were Collin Plume, Rory Hamilton and Warren Berzack while Margie Jones of 222 Commercial Group represented the seller, Agoura Village Center, LLC. IREA also was involved in the sale of an 80-unit apartment complex in San Bernardino for $9 million. Bo Drake and William Everitt of IREA represented the buyer, JLO Properties, LLC. The seller, Clyde Street Properties, LLC was represented by Alex Mogharebi of Marcus & Millichap. Multi-Family Sale A 100 percent occupied, 19-unit apartment building in Canoga Park sold for $2.85 million, with Paul A. Kenworthy, managing director of the Charles Dunn investment services group in West Los Angeles representing the buyer, Saswata Sen and the seller, Khougaz Trust. The building at 7037 Alabama Avenue is 17,324 square feet and the apartments are not rent controlled.. The building totals 17,324 square feet and is 100 percent occupied. Litigators Expand Lease The law firm Loewenthal, Hillshafer & Rosen LLP is expanding its Sherman Oaks office, adding 1,100 square feet to its existing 8,447 square feet and renewing its lease for a six-year term. The transaction is valued at approximately $1.75 million, according to Lee & Associates Principal Thomas N. Specker (LA North/Ventura) represented the tenant while the landlord at 15260 Ventura Blvd., Douglas Emmett Management, was represented in-house by Carol DeFore. Expanding New Vision New Vision Power Property LLC, a manufacturer of fashion eyewear, spent $2.5 million on their purchase of a 21,904-square-foot industrial building in Sun Valley. The seller, AJJ Funding Corp., was represented by AJJ Funding in the transaction by Jack Schlaifer, senior vice president at Lee & Associates-LA North/Ventura, Inc. The buyer of the single tenant building constructed in 1987 was represented by Thomas Chang at America Realty. The Ventura County office of CB Richard Ellis has facilitated the relocation of Whaling West Packaging Corporation from their existing space in Newbury Park to a larger facility in Thousand Oaks, recently vacated by Amgen. The packaging and crating company signed a multi-year lease for 50,000 square feet of industrial space at 800 North Mitchell Rd. CBRE Vice President Bob Boyer represented both the tenant and the landlord, TO Industrial Corporation, in negotiations. Staff Reporter Linda Coburn can be reached at (818) 316-3123 or at [email protected].

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