Last week, CBRE Group Inc. announced that it had arranged a seven-year, $12-million loan to refinance the 143,973-square-foot industrial Moorpark property known as Princeton Industrial.
Owned by Nearon Enterprises, a real estate investment company based in Walnut Creek, the building at 14501 Princeton Ave. recently became 100-percent occupied by AeroVironment Inc., the manufacturer of unmanned aircraft for defense and commercial uses headquartered in Simi Valley.
For the burgeoning tech manufacturing market of Moorpark and for greater North Los Angeles, companies such as AeroVironment epitomize the next-level, 21st-century wave of manufacturers that are making lease commitments across the San Fernando, Conejo, Simi and Santa Clarita valleys.
The Greater Los Angeles industrial market showed its strength at the mid-point of the year with positive market dynamics, according to second-quarter research from CBRE. Vacancy declined as rental rates rose, and, despite the lack of available product, activity levels increased in several submarkets.
“The Valley is still the number one manufacturing hub in Los Angeles and Los Angeles is still the number one manufacturing hub in the nation,” said Jeff Abraham, an industrial broker at Newmark Knight Frank in Woodland Hills.
And while e-commerce and streaming-related content creation are emerging as key drivers across North Los Angeles’ industrial submarkets, the evolving nature of manufacturing – including defense- and biotech-related production – is rapidly replacing more traditional manufacturing.
One of the areas benefiting from the surge of high-tech manufacturing activity is the Ventura County community of Moorpark.
“There has been a lot of new investment for sure (in Moorpark),” said Shaun Moothart of CBRE, who helped negotiate the Nearon refinance deal. “There has been a lot of repositioning of property in and out of the immediate area and an increasing demand from tenants from surrounding cities and markets into the Moorpark city.”
“Nearon built a nice building and they were able to have a catcher’s mitt,” added Abraham.
Lee & Associates – LA North/Ventura, Inc. President Michael Tingus has been a prime negotiator in the Moorpark industrial market.
“Moorpark has always been a sleeper market,” Tingus said. “You can pull good engineers out of Newbury Park, Thousand Oaks, Simi Valley. It’s a great transportation corridor, you don’t get clogged up like on the 101 (freeway).”
Tingus said that the Nearon building and AeroVironment’s full occupancy of it has been “a nice win for the city of Moorpark.” And there are plenty of other recent deals.
Nearby, at 200 Science Drive, manufacturer Benchmark Electronics signed a 130,000-square-foot lease. At 5898 Condor Drive, Laritech Inc., which creates the brains in parts components for such products as Bird electric scooters, needed to expand its space from 12,000 to 70,000 square feet in the same Moorpark area. Lee’s Tingus was among the agents brokering that transaction.
In the Valley, Align Aerospace has moved from 59,000 to 66,570 square feet but with a different layout at 9401 De Soto Ave. in Chatsworth.
All of these deals have closed within the last year and there’s still room for more growth in Moorpark, Tingus said.
Quest for parking
With a vacancy rate in the East Valley less than 0.5 percent, Abraham said that manufacturing has been moving toward the west.
“It’s a challenge to find any type of good area today,” he said.
And with manufacturers, “there has been a big drive for parking now, more so than there was years ago,” Abraham added. “It’s important we find space for parking. Modern industrial buildings are good for manufacturing. They have power and parking. Usually distribution means less parking; manufacturing needs more.”
Biotech, another segment of new manufacturers looking for laboratory space and parking, is another sector “that’s also starved for the right product,” Abraham said.
At Conejo Sprectrum Business Park in Thousand Oaks, a team led by Newmark Knight Frank’s John DeGrinis signed Amgen Inc. spinoff Atara Biotherapeutics for 116,000 square feet in a building with no loading docks in the back.
“The infrastructure in their building is worth more than the building,” Abraham said. “That was huge.”
Abraham has another biotech client from Camarillo currently searching for 50,000 square feet of Conejo Valley space.
“They want to be next to Atara,” Abraham said, because that is where all of their peers and clients are.
Despite the shifting trends in manufacturing, not all tenants are interested in newfangled products because traditional ones still prove profitable.
“Cosmetics is a huge driver in the San Fernando Valley. We work with many cosmetics manufacturers,” Abraham said, including one looking to consolidate five buildings in Chatsworth. “We leased them another 35,000 square feet.”
Another user, Abraham remarked, is a wholesaler of restaurant supplies with a location in Van Nuys. The company is currently searching for a second space in either Simi Valley, Thousand Oaks or Moorpark to capitalize on the 101/23/118 freeways corridor.
“Their parking need is big and you can’t find an existing building that has it,” Abraham said.
Abraham knows of another cosmetics company that’s signed onto 60,000 square feet at Nordhoff Street, having moved from Royal Avenue in Simi Valley to Chatsworth. Orly International Inc. is currently in escrow to sell 55,000 square feet of its Van Nuys home base.
“They’re consolidating it into another building,” Abraham said.
LifeTech Resources, a manufacturer of cosmetics, personal care and wellness products, relocated from Chatsworth to Moorpark. According to Tingus, it was a big move in which the company vacated five buildings in Chatsworth to consolidate into a single 150,000-square-foot building at 700 Science Drive.
Tingus noted signing up Italian Kitchen Designs, a manufacturer and distributor kitchens, to a Simi Valley lease at 875 E. Cochran St. two months ago. He is currently marketing a 155,000-square-foot space at 2280 Ward Ave. in Simi Valley.
“We’ve showed it four times in the last six business days,” said Tingus.
The year ahead
Deepening into 2019, expect the trend of manufacturer migration to continue.
“Some are looking for more space, but it’s hard to find space,” Tingus said. “A lot of them are increasing their manufacturing capacity and outsourcing some of their storage space – renting out a portion of their warehouse and trying to find some public warehousing. … You’re going to continue to see some ground-up development but we’re getting land constraints so you’ll see fewer and fewer ground-up (scenarios).”
Host to such complexes as the 116-acre IAC Commerce Center in Valencia, the Santa Clarita submarket still has much runway, Tingus said, as does Ventura County, although that market is lagging because of very limited employers and housing.
“Housing is definitely a concern,” Tingus said. “‘Where do I put my worker bees?’”
Abraham said that partnering with business-friendly communities such as Santa Clarita and Moorpark has been beneficial to incubating manufacturing clusters. He commended Santa Clarita Valley Economic Development Corp. and its leader, Holly Schroeder.
“She has done a phenomenal job,” Abraham said. “She has great outreach to brokers.”
As for the Byzantine bureaucracy developers often go through in Los Angeles proper, “the city of L.A. is tough – hard to get through to anybody,” Abraham said. “I don’t even know who to call in L.A. and I’ve been in the business for 11 years.”