Econowatch

valley econowatch/dy/mike1st/mark2nd By DOUGLAS YOUNG Staff Reporter The Valley industrial real estate market reached a major milestone in the first quarter of 1997, as vacancy rates in all four of the area’s submarkets finished in the single digits for the first time in several years. The East Valley posted the lowest first-quarter vacancy rate, finishing at a scant 4.7 percent. Also finishing strong was the West Valley, at 7.8 percent, the Central Valley, 9.1 percent, and the Conejo Valley, 9.8 percent, according to Grubb & Ellis Co.. Driving down industrial vacancies is steady growth of the entertainment industry in Burbank and Glendale, which has pushed East Valley vacancy rates to their current low levels. The dearth of available space in the East Valley is spilling over into the Central, West and Santa Clarita valleys, where large spaces are also being gobbled up at a brisk pace, said Joe Kraus, an industrial specialist at the Encino office of the Seeley Co. “It’s not only the big entertainment companies that are taking up space, but also the little guys as well, like the guys who make and store products such as props and vehicles for the entertainment industry,” Kraus said. In fact, the demand for industrial space means properties with 100,000 square feet or more of vacant space are now virtually non-existent, said Ross Thomas, a partner at Delphi Business Properties of Van Nuys. “One or two years ago, there would have been four or five properties with 100,000 square feet of vacant space in the East Valley and half a dozen in the West Valley,” he said. But today, there is only one large vacant space in the entire East Valley and only two in the West Valley, he added. The strong demand for space has already sparked new industrial development in the San Fernando Valley. Nearly 100,000 square feet of industrial space is currently under construction in the Valley proper, according to Grubb & Ellis, and another 460,000 square feet of space is being built in the Santa Clarita and Conejo valleys. “We could see up to 1 million square feet of new (industrial) space under construction by year end,” said Kraus, adding that his projected figure doesn’t include additional space being developed in the Santa Clarita and Conejo valleys. Kraus predicted much of the new development this year will occur in the East and Central valley. He said one new project being planned by the Lewis Co. scheduled to break ground in September at the former Litton site on Woodley Avenue and Strathern Street in Van Nuys will add about 500,000 square feet of new industrial space to the market. Thomas agreed that a bigger development boom could be on the way, though he was less sure about the timing. “Speculative activity will have to pick up. Developers and financiers took such a beating in the last few years that they’re reluctant to get back into speculative development, but the supply of space is fast running out,” he said.