Here it comes. Latest data from Grubb & Ellis shows that the long awaited office rent spike has finally begun. Asking rents for Class A office properties in the greater San Fernando Valley jumped 6 percent in the first quarter, compared to the fourth quarter of 2006 and 13.7 percent from the year ago period. It is the largest quarter-to-quarter increase in recent memory but not unexpected. The vacancy rate has been tightening for about a year now, and with little in the way of new construction on the horizon, brokers have for months been predicting a steep rise in office rents. But until this quarter, the increases have been moderate from one quarter to the next. The average asking rent for Class A property in the Valley overall was $2.65 per square foot as of the first quarter of the year, up from $2.49 per square foot in the fourth quarter and 13.7 percent greater than the year ago period. Class A office rents in the Santa Clarita Valley rose 8.5 percent to $2.78 per square foot, a 13.9 percent jump from the year ago period. Rents in the Burbank market remained steady compared to the fourth quarter of 2006, but only because the levels in that submarket have already exceeded $3 a square foot. Class A properties in Burbank averaged $3.10 per square foot in asking rents. The culprit, of course, is the limited availability of space, which only got tighter in the first quarter, the Grubb & Ellis data showed. Office vacancy rates in the Valley dipped to 5.6 percent in the first quarter, from 6 percent in the fourth quarter of 2006 and 7 percent in the first quarter of 2006. The East Valley showed the lowest vacancy rate, 2.3 percent, which was down from 5 percent in the year ago period. Warner Center Acquisition Weintraub Financial has acquired a Woodland Hills business park for $10 million. The acquisition is a 2.18-acre parcel with 39,000 square feet of office and industrial space at 6253 Variel Ave. called El Dorado Business Park. The company hopes to redevelop the property for commercial use as an office building or a multifamily complex, but could not move forward on a multifamily development at this time because of an interim ordinance currently in effect in Warner Center. Jeff Albee, a Sperry Van Ness broker who, with Sperry’s Jeff Gould represented the buyer and seller in the deal, said that the current property on the site will allow the buyers time to finalize their plans. “There’s a building on that property that is cash flowing, so you can carry the land a lot better than you can a site that doesn’t have a building,” said Albee. “And the rents were below market, so they can wait it out like every other person.” An interim ordinance prohibiting additional residential development in Warner Center was put into effect late in 2005 when the number of planned residential units reached the maximum set aside in the Warner Center Specific Plan. The ordinance could remain in effect until the Specific Plan is revised to account for what had been a surprisingly fast increase in residential development in the area. But at least one developer has challenged the ordinance, a move that is currently winding its way through the city’s hearing process. The Planning and Land Use council (PLUM) sent the matter to the city council without a recommendation, and the council is expected to hear the case this week. If the council overturns the moratorium, a number of developers who have been waiting in the wings are likely to move forward with plans to convert commercial property for residential use. If the council upholds the moratorium, many believe some may file lawsuits against the city challenging the measure. Camarillo Office Development Begins The city of Camarillo has approved plans for a $35 million office park in the Heritage Zone. Opus West is developing the park, which is located on nine acres fronting the Ventura Freeway between Callegues Creek and the Camarillo Ranch House. The development will include a two-story office building, which the developer plans to lease, and 13 condominium office buildings ranging in size from 2,135 square feet to 7,400 square feet for sale. In total, 127,050-square feet of property will be developed on the site. Ground is slated to break on the project, tentatively named Camarillo Ranch Center, next month with a completion date of March, 2008 expected. The developers said that the project will be one of just a few of its size that can be expected to go up in Ventura County. Multifamily Sale Casa Prada, a 123-unit apartment complex in Canoga Park, has sold for $16.5 million. The property, located at 8609 De Soto Ave., was built in 1976 and recently renovated. Robin D. Ossenbeck of Hendricks & Partners represented the buyer, DLGP Real Estate Investment Fund LLC, and the seller, Coastal Park Creek LLC. Palmdale Shopping Center An 81,050-square-foot shopping center in Palmdale has been sold to a private investor for $10,840,000. Reza Etedali and Ramez Barsoum of REZA Investment Group Inc. transacted the deal. Chatsworth Sale First Industrial Realty Trust Inc. has acquired two industrial buildings in Chatsworth for $6.3 million. The properties, at 21730 and 21748 Marilla St., are fully leased. Randy Kobata, a principal with Lee & Associates, represented the buyer. The seller, Perpetual Real Estate Investments, was represented by Karen Fussell of EZ Realty. Senior Reporter Shelly Garcia can be reached at (818) 316-3123 or by e-mail at [email protected] .
