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PAT KRAMER Contributing Reporter The first quarter kicked off in high gear in the San Fernando Valley, where the office market was very active due to limited class-A space. “It’s a building agents’ dream,” said Tom Festa, associate vice president at Grubb & Ellis Co. “There are no new buildings, so as business grows, the space is being absorbed. There are very few large blocks of class-A space over 50,000 square feet left.” Over the last two quarters, there has been upward pressure on rents in the Valley, particularly in Woodland Hills and the Conejo Valley, and lately in Encino and Sherman Oaks. Office vacancy rates continue to decline. Grubb & Ellis places the Valley vacancy rate at 4.6 percent, down from fourth-quarter 1997’s 5.5 percent, while the Conejo Valley dropped from 7.4 percent to 4.6 percent. One of the hottest markets is the East Valley, where entertainment and high-tech companies are taking up more and more of the available space, according to Grubb & Ellis Research Director Dan Wakumoto. One major lease involved Panasonic Broadcast & Television Systems Co., a division of Matsushita Electric Corp. of Japan, moving into 46,000 square feet of space in Universal City. Hammer Management owner Sam Young says Panasonic leased the space after Unitel and Turner Broadcasting Co. vacated two, 30,000-square-foot offices during the third quarter. The former Hewlett Packard building in North Hollywood has changed hands again: Brad Feld, associate director at Cushman & Wakefield, says the sale of the 201,000-square-foot building at 5161 Lankershim Blvd. was part of a $600 million portfolio purchase by Arden Realty Inc. from Leighton-Belling & Associates and AEW. Feld notes that during the first quarter, 31,000 square feet of space was leased in that building. In the Central Valley, Delma Properties of New York purchased two office buildings from Boston’s T/A Associates: the West Hills Plaza, an 84,000-square-foot building at 20700 Ventura Blvd., and the Sherman Oaks Atrium, a 96,000-square-foot building on Magnolia Boulevard. Both properties are about 90 percent occupied. Leasing activity is picking up in the West Valley, where multiple listings are becoming the norm. With vacancy rates falling from 14 percent to 10.8 percent between the end of 1997 and the end of the first quarter, Wakumoto says, “It’s turning back to being more of an owner’s market than a tenant’s market.” Warner Center Properties’ Bob Pearson reports 70 percent occupancy of the company’s 23 office properties in Woodland Hills, which comprise 585,000 square feet in total. The occupancy rate is up from 20 percent a year ago. Recent bank acquisitions have created a great deal of available space. On the office front, the 30-acre, 380,000-square-foot campus that was formerly the headquarters of Coast Federal Bank in West Hills came on the market following H.F. Ahmanson & Co.’s acquisition of Coast in February. In addition, a number of small bank branch offices are flooding the market. Last month, when Washington Mutual Inc. announced a deal to acquire Ahmanson, parent of Home Savings, it made plans to consolidate 160 to 179 bank branches. Nine Coast Federal/Home Savings branches are on the market in the Valley, ranging in size from 2,000 to 10,000 square feet. Meanwhile, development plans were announced by Katell Properties for Warner Ridge, a $200 million residential/commercial project at Oxnard and Desoto avenues in Woodland Hills. Lincoln Property Co. has been hired to construct the residential portion of the development: about 125 Mediterranean-style, luxury apartment units on 5.3 acres of the 21.5-acre site. That initial portion is expected to break ground in May, while the commercial portion will launch in 1999. In the Conejo Valley, several large transactions were reported in the first quarter: Countrywide Industries signed a lease with developer/owner ACD2 for an 85,000-square-foot, build-to-suit office development in Calabasas. Meanwhile, Lincoln Property purchased the 100,000-square-foot Exxon facility in Thousand Oaks, which it will convert to a multi-use property. “The real activity (in the first quarter) has been in the Conejo Valley and the West Valley,” said John DeGrinis, vice president of Seeley Co. “With industrial vacancy at around 4 percent for the entire San Fernando Valley, the Conejo Valley is a hotbed right now.” Lincoln Property purchased a 127,000-square-foot building in Westlake Village, presently occupied by Boeing Co. And Blue Cross of California leased Binder Realty’s 90,000-square-foot building at 5000 Lakeview Canyon Road in Westlake Village. Speculative development will be getting underway once the rains stop at the 38-acre Calabasas/Lost Hills Business Center at Agoura Road, where Cypress Land Co. has plans for 400,000 square feet of industrial-use buildings. Plans call for three R & D;/industrial use buildings. In the West Valley, activity was limited during the first quarter, due to a lack of available property. “If you are looking for 100,000 square feet or greater, there’s only one building in the entire West San Fernando Valley that is R & D; or industrially related, and that’s on Mason Avenue,” says DeGrinis. “Normally, you have half a dozen to a dozen of these buildings available, but right now, we’re down to such a scarcity that hardly anything exists.” Ground was broken during the first quarter at The Plant, where The Voit Cos. and Selleck Properties are developing an industrial/commercial park at the former General Motors plant on Van Nuys Boulevard. Cushman & Wakefield’s Mike Clark says Ricon Co. of Pacoima has signed a lease for 200,000 square feet, making it the first tenant. New plans include a state-of-the-art, speculative building of 154,000 square feet at the 600,000-square-foot site. The site also includes 370,000 square feet of retail space, where Home Depot, Office Max and Ross Dress For Less have signed leases. Mann’s Theatres has also signed a lease for a 16-screen megaplex. The project is expected to be completed by the end of the year.