Office Vacancy Trends Down in Last Year

Rounding another quarter, the resilient office market maintains its stability while short supply drives activity in the industrial submarket, based on third-quarter data provided by Colliers International. In the office market San Fernando Valley vacancy has sunk 4 points since the same quarter last year. Otherwise, the market on par with last year as West San Fernando Valley chugs along with a 12.3 percent rate (versus 2017’s 12.9 percent) and Central San Fernando Valley posted 7.2 percent (down from 10.4 percent last year). The East Valley market inched up slightly to 10.3 percent. In the Glendale and Burbank markets, office vacancy in Burbank rose almost a full point over 2017 to 13.9 percent, while Glendale’s figure ballooned, to 19.9 percent from 2017’s 13.5 percent. The latter market is reeling from the effects of Nestle USA’s 1,200-employee exodus from 800 N. Brand Blvd., where 12 contiguous floors remain unleased. In Santa Clarita Valley, vacancy is 14.7 percent — down from 16.5 percent last quarter but up from 2017’s 13.6 percent. While Antelope Valley’s office inventory totals to less than 1 million square feet, the third quarter yielded good news with a 7.3 percent vacancy, dramatically lower than 18.2 percent in 2017. As for office leases, in July personal care product company Jocott Brands took 64,100 square feet in the Lewis Business Center at 8000 Woodley Ave. in Van Nuys. According to CoStar Group, the CBRE- and Lee & Associates-brokered deal was valued at $6 million. That same month Anthem Blue Cross announced its relocation to more than 169,000 square feet in the Campus at Warner Center complex in Woodland Hills. . In August, Newmark Knight Frank represented software maker Nuance Communications as it renewed its lease for 34,256 square feet at 29903 Agoura Road in Agoura Hills. Action-packed industrial For warehouse and manufacturing space, the San Fernando Valley has a 1 percent vacancy rate, compared to 1.4 percent in 2017, while Ventura County has 1.2 percent versus 1.9 percent last year. In Santa Clarita, where manufacturing facilities equal a combined 18.4 million square feet, vacancy rose nearly two notches from 2017 to 6 percent, but remains statistically offset by 552,100 square feet of industrial space in the pipeline — more than in any other market in the region. With its meager 8.3 million square feet of inventory and only 43,000 square feet under construction, Antelope Valley struggles as vacancy climbed from 1.4 percent a year ago to 2 percent this past quarter. Meanwhile in the San Fernando Valley, warehouses saw significant third-quarter action. In the lease market, L’Oréal USA – in a transition finessed by Colliers and CBRE Group Inc. — ditched its Valencia digs to relocate the regional logistics operation for subsidiary SalonCentrics to Tejon Ranch Commerce Center, where the New York-based cosmetics giant committed to 480,000 square feet of brand-new warehouse space in the substantially cheaper market of Kern County. Sales-wise, Rexford Industrial Realty purchased a 122,868-square-foot industrial building in the north San Fernando Valley submarket of Pacoima from lighting equipment firm Mole-Richardson for $22.5 million. The Colliers team of John DeGrinis, Patrick DuRoss and Jeff Abraham facilitated the transaction for the REIT, which holds a vast portfolio of industrial properties throughout Southern California’s infill markets. “Increased development, investment and owner-user activity during recent years has bolstered job growth and added tax revenues in these depressed infill areas, particularly Pacoima, Sun Valley and parts of Van Nuys,” DeGrinis said in a statement. “These submarkets … have quickly become sought-after locations for entertainment companies seeking studio and other industrial space.” In July, San Fernando Valley-based Nadavco LLC bought a nearly 40,000-square-foot Simi Valley industrial building for $7.3 million. “Opportunities such as this premier 8.5-acre industrial site in Ventura County do not come by often,” CBRE’s Bennett Robinson, who represented seller Overton Moore Properties, said in a statement. September proved particularly active as Westcore Properties acquired a 114,556-square-foot facility at Condor Drive in Moorpark. The $13.8 million deal included an adjoining 2.55 acres of unimproved parcel. Also, Sun Valley-based Ratner Property Management gained a 77,150-square-foot Sylmar complex for $6.56 million with an eye toward upgrading. Also, Alexander Henry Fabrics Inc. purchased a warehouse at 301 S. Flower St. in Burbank for $4.3 million. “The East San Fernando Valley, in particular, is one of the most sought-after submarkets in the region, with sales prices at record levels,” NAI Capital Senior Vice President Adam Comora, who co-brokered the deal, said in a statement. “Good product is in short supply.”