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Friday, Mar 29, 2024

Report Indicates Worst May Be Over in Office Market

According to Colliers’ San Fernando Valley and Ventura County office market report for the third quarter of 2010, it may appear that the market is finally closing in on the bottom. In Q3, office vacancy rates inched up an additional 10 basis points to 20.1 percent, but that increase represents the smallest quarterly increase in the vacancy rate in three years. “Combined with the lack of new construction, it appears that the worst of the space givebacks have already occurred,” reads the report. Still, this vacancy constitutes an all-time high in the San Fernando Valley and Ventura County office market. The total vacancy rate for the San Fernando Valley market alone increased to 19.3 percent. Average asking rents also decreased for the eighth consecutive quarter to $2.25 per square foot, per month, the lowest average asking rental rate seen market-wide in four years, according to Colliers. Leasing activity decreased 17 percent over the last quarter to 548,200 square feet, even as this quarter saw larger office leases signed, including Zebra Technologies taking 76,100 square feet at 30601 Agoura Rd. in Agoura Hills; Bank of America leasing back 72,800 square feet at 2900 Madera Rd. in Simi Valley; and On Assignment, Inc. taking 37,200 square feet at 26745 Malibu Hills Rd. in Calabasas. With rental rates now at 2006 levels, the report concludes that the area remains a tenant’s market for the foreseeable future. Industrial Activity According to Collier’s industrial market report sales and leasing activity of industrial space in Q3 was 1.4 million square feet in the SFV and Ventura County areas, which was up 31 percent from Q2. As landlords have continued to be aggressive in attracting and retaining tenants, Colliers expects leasing activity to remain at a higher level compared to the last nine months as industrial users find favorable deals within the market. On the sales side, acquisition activity has been dominated by smaller, owner/user sales as many industrial users feel now is the opportunity to acquire their own buildings. Those that did just that this quarter include Stellar Microelectronics, which acquired their building from their landlord at 28454 Livingston Ave in Valencia for $14.0 million; and Kingsbridge International which purchased two buildings totaling 208,500 square feet at 2900-2950 Madera Rd. in Simi Valley from Bank of America for $11.42 million. The total industrial vacancy rate increased 20 basis points to 5.1 percent. Vacancy rates remain highest in the Simi Valley/ Moorpark submarket (8.9 percent), and lowest in the Central San Fernando Valley submarket (just 2.1 percent). Vacancy rates in the San Fernando Valley & Ventura County industrial market remain among the lowest in the entire Greater Los Angeles Basin. Transactions Glendale, which sits on approximately 9 million square feet of industrial space (land that has been zoned as industrial), has a relatively low inventory of industrial properties. Those available are being sold or leased quickly. Recently, a 22,842 square foot industrial building located at 912-916 Western Avenue in Glendale sold within just 60 days of being on the market. “Glendale has weathered the downturn pretty well,” said Tony Maniscalchi, who along with Mike Maniscalchi, of Stevenson Real Estate Services represented the seller in this transaction valued at $3 million. The building, constructed in 1978 with parking for 28 vehicles, is situated on 35,488 square feet of industrial zoned land. The property had been occupied by Paladeo- Int. Designers, who after 15 years in business, closed down approximately 9 months ago. In September the property owners, the Brown Family Trust, sold the building to the Swan family, who own CYGNET stamping, a manufacturing company that specializes in short-run metal stamping and precision sheetmetal fabrication. CYGNET was being forced to relocate from its previous location in Glendale due to the CALTRANS expansion for freeway improvements. The move will allow CYGNET to go from leasing a property to owning its own commercial space, an opportunity that many business owners are jumping at in the downturn due to record low prices and interest rates. New Tenants Regency Centers LP has leased three separate retail units in the El Camino Shopping Center in Woodland Hills for a total consideration of over $1.3 million. Michael Schiff of NAI Capital’s Westlake Village office represented Regency Centers and the three new tenants in the separate lease transactions. Thaichaba, a Thai restaurant, leased 1,328 square feet of space in the center for a long-term lease value of $640,000. In a separate transaction, Mulholland Cosmetic Dental signed a 10-year lease for 1,065 square feet of space for a value over $500,000. Additionally, Schiff represented Tonino’s Place, a cafĂ© specializing in gourmet pizza-by-the-slice in the lease of a smaller space at 23351 Mulholland Drive for a value of $192,444.00. El Camino shopping center is anchored by Vons and CVS Pharmacy. Other national tenants in the center include, Bank of America, Islands, Baskin Robbins, Taco Bell, Subway, Gymboree and Radio Shack. Grand Opening Ivy Terrace, a new “green” and affordable housing community in Van Nuys celebrated its grand opening. Developed and managed by Abode Communities, Ivy Terrace is a 52-unit development in Van Nuys for working families with incomes between $19,900 and $49,700 per year. Rents will range from $434 to $1,253 for apartments that are one to four bedrooms and approximately 620 to 1,330 square feet. A hallmark of the $23.7-million development is a solar energy system that will generate 50 percent of the energy needs for all community areas. Ivy Terrace will also employ energy-efficient heating and cooling systems, building materials and appliances that will allow it to surpass California’s Energy Efficiency Standards and earn LEED (Leadership in Energy and Environmental Design) certification. Expansion Residential real estate firm Rodeo Realty is expanding its Woodland Hills location and opening new branches. The company added 3,000 square feet to its Woodland Hills office, which accommodates 12 new private offices, six cubicles. Rodeo has secured space for a new office in Beverly Hills and the firm has also begun searching for new branch locations in Brentwood and the Sunset Strip. Already the firm has hired more than 100 agents in 2010 alone. The company plans to increase the Woodland Hills branch’s number of producing agents by 25 or more. Staff Reporter Andrea Alegria can be reached at 818-316-3124 or at [email protected].

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