Two publicly traded companies in Westlake Village were acquired in one week this month, leading to hand wringing among economic development officials. But with the Conejo Valley attracting other new corporate headquarters, the region may not be a faded hotspot as much as a business incubator. On June 14, homebuilder Ryland Group Inc., which has been headquartered in Westlake Village since 2011, announced a merger with Irvine-based homebuilder Standard Pacific Corp., forming the country’s fourth-largest residential developer. The combined company will have a $5.2 billion market capitalization and plans to maintain a corporate presence in California as well as establish an office on the East Coast. Three days later, Kythera BioPharmaceuticals Inc., a Westlake Village biotech founded 11 years ago, announced it would be acquired by Allergan plc in a $2.1 billion buyout. Allergan has an office in Irvine but its U.S. operations are based in Parsippany, N.J., while the parent company is based in Ireland. Ryland and Kythera join Conversant Inc. in the exodus of publicly traded companies from the Conejo Valley. The online advertising firm was purchased for $2.3 billion by Alliance Data Systems Corp. of Plano, Texas last September, But the region has a pipeline of public companies to replace the losses. For example, American Homes 4 Rent moved to Agoura Hills from Malibu in June 2013. And Marcus & Millichap Inc., a multifamily property real estate brokerage that went public in 2013, moved to Calabasas three years ago. The Conejo Valley, of course, also boasts the longtime headquarters of Amgen Inc. in Thousand Oaks, and is attractive to executives with its inventory of upscale homes, great schools and safe cities – all within relatively easy access to behemoth Los Angeles next door. On the downside, there is little low-cost rental housing to accommodate employees, who typically have to commute from the San Fernando Valley or Simi Valley to get to work. Brent Reinke, a partner specializing in acquisitions at the law firm Musick Peeler & Garrett LLP in Westlake Village, pointed to Kythera, whose Chief Executive Keith Leonard is a former Amgen executive, as an example of why the region generates takeover targets. Because top executives want to work close to home, the region hosts a lot of startups. “You have quite a high number of headquarters for an area of its size,” he said. “Basically, there is a ‘target rich environment’ of corporate headquarters in the area which might be acquisition targets.” Vacancy concerns With Kythera and Ryland deals still in the early stages, it’s too soon to tell whether either one will move to Orange County where their merger partners are based, decamp to another location entirely, or stay put. For instance, even though the Conversant acquisition moved its headquarters to Texas, the company maintained its presence in Westlake Village. But whatever the outcome, it seems clear that the Conejo Valley office market will survive and possibly even thrive. The submarket’s office vacancy rate was still high at nearly 15 percent in the first quarter, according to Colliers’ data. But the region has seen three straight quarters of net absorption. “Vacancy is still on the high end, but the market has tightened considerably from the softness of where it was in the days when it was overbuilt,” said Colliers International Vice President Jeff Gould, a broker in the firm’s Encino office. “Now, the smaller buildings are leasing up and there’s less and less large contiguous space available.” The regional also boasts relatively low lease rates for Class A office property compared to submarkets closer to Los Angeles. During the most recent quarter, asking rates in Conejo Valley were $2.19 a square foot, compared to $2.71 on average in L.A. County. Still, the loss of either public company would disrupt the Conejo Valley job market, especially as it comes amid cutbacks at Amgen, which is trying to trim its total payroll by 15 percent. “We hate to see a company like (Ryland) leave, because that would definitely hurt our economy,” said Haider Alawami, economic development director for the city of Thousand Oaks, which counts Ryland within its borders. “We’re hoping they stay put. We plan to pay them a visit to talk about what we can do to facilitate that.” Ryland has 27,000 square feet at 3011 Townsgate Road. Its lease runs through October 2017, according to real estate data provider CoStar Group Inc. The loss of Kythera could hurt even more. The company is on the hook through July 2017 with its lease for 24,500 square feet at 30930 Russell Ranch Road., but it’s potential to take more space seemed huge. It is one of the hottest biotech stocks; its Kybella, an injectable treatment to reduce chin fat that won approval from the Food and Drug Administration in April. The losses also come as the economic recovery is hitting its sixth year, and the region is finally feeling improvement in its commercial real estate market. “It has always been hyper-cyclical,” Gould said. “It’s one of the last office markets to recover and one of the first to go south when things go bad.”
