A Story about Downsizing, And Deals Big and Small

A few months ago, I was living in Albuquerque, N.M., had a great job writing for the state’s largest newspaper, nice truck, and was quite content in my three bedroom home with lush green yard. Only problem: My kids moved to Los Angeles to live with their mom, and I missed the little ones. They’re six and nine years old. So I decided to move to California, no matter what it entailed. I rented my home out and moved in with a friend in Albuquerque for the short-term. Since I hadn’t yet landed full-time work in California, I raised funds for the move by selling my SUV and buying an older, cheaper and significantly more weathered vehicle. To get out here quick, I sold and gave away virtually everything I owned, moved into a tiny and I do mean tiny — efficiency apartment in West L.A., and furnished my new abode with finds from the Salvation Army and Craigslist. A true exercise in downsizing. And the process has been scary, humbling and exhausting. Was it worth it? Absolutely. I got rid of stuff I don’t need, get to spend as much time as I want with my kids, love California, and was blessed to land a full-time job, a week after arriving, with the San Fernando Valley Business Journal. So this is my official hello as the paper’s new real estate, banking/finance and technology reporter. Greetings aside, there’s a point to my story. Many of us are downsizing or dealing with the effects of it these days. In the real estate business this means less of the big and sexy deals, more give on commission splits, property values and rents decreasing, vacancy rates skyrocketing, and the future being anything but certain. For the past two weeks, I have gotten a crash course in the current state of commercial real estate in the San Fernando Valley. The numbers ain’t pretty. The market continues to deteriorate and nobody seems to know if we’ve hit bottom yet. Scared, humbled, and exhausted might also best describe the emotions brokers, landlords and others in the business are feeling. Change is hard. But there’s optimism and faith in the market, not unlike what I had to muster up to move to California. I consider furnishing my apartment with finds from the Salvation Army a small success. Landing a full-time job in journalism with a great publication is huge. Being with my kids again “success” doesn’t even begin to describe it. Downsizing, while no doubt uncomfortable, is forcing folks in the real estate business to think strategically and creatively, streamline, and celebrate successes big and small. And you know what? Deals are happening. A Big Deal Normandy Real Estate Partners and Five Mile Capital Partners won the Uniform Commercial Code auction for the 770,773 square foot, 35-story office building at 10 Universal City Plaza in Universal City. The bid was for $10.1 million and the acquisition of a $294.8 million mortgage. A partnership between Normandy Real Estate Partners and Five Mile Capital Partners has been acquiring properties owned by Broadway Partners at discounted prices. In the case of the 10 Universal City Plaza, Broadway Partners had defaulted on its loan. Normandy and Five Mile also picked up Boston’s John Hancock Tower in the UCC auction. Congrats to Santa Clarita Valley Net absorption refers to the change in occupied square feet in a given market over a certain period of time. In the first quarter of 2009 Santa Clarita was the only place in the San Fernando Valley area to see positive net absorption in its commercial real estate market, according to Colliers International. Yair Haimoff of NAI Capital says some of the area’s aerospace companies are expanding and leasing more industrial space. Aerospace Dynamics International recently leased 28,000 square feet of industrial on Avenue Stanford. And Harley-Davidson even leased 24,000 square feet in the Centre Pointe Business Park. Moorpark’s got Class A The 300,000 square foot Patriot Commerce Center in Moorpark is celebrating its grand opening on April 23. More than four years in the making, the business park includes Class A industrial and office buildings and condos. Lee and Associates is the exclusive marketing agent for the property and RCI acted as general contractor. The grand opening will include presentations by the mayor of Moorpark and city officials, tours of the property, raffle prizes, food and more. It takes place from 4 p.m. to 7 p.m.. Multi-Family Activity Jim Fisher and Mike Smith at Lee & Associates transacted the sale of a 19-unit multifamily property at 1035 Melrose Ave. in Glendale for $3.2 million. The final sales price was more than 9 percent above the listing price. “The property drew 11 offers in just five days,” said Fisher in a press release. “Well located apartment assets are going to continue to attract buyers because they offer consistent and reliable cash flow, even in a weak economy.” The property, built in 1961, sold at a 4.66 percent cap rate after just 16 days on the market. The buyer and seller were private investors. Concessions, Concessions California Music Brokers signed a three-year lease on a 4,000-square-foot industrial property at 9621 Canoga Ave. in Chatsworth. The effective rent is $0.72 per square foot. The lessor, Darius Enterprises LLC, offered six months of free rent as part of the deal. Grubb & Ellis represented the lessee. George Stavaris of Grubb & Ellis says the transaction is a big deal because it shows how far some landlords are willing to go, in terms of concessions, to lease their properties. He has not seen a lease price this low for industrial property for 10 years. And he says neighboring landlords seemed to take notice. Staff Reporter Eric Billingsley can be reached at (818) 316-3124 or at [email protected] .