Production Firm Takes Van Nuys Warehouse

A Pittsburgh-based production company has signed a 108,162-square-foot industrial lease in Van Nuys. Bennett Robinson of CBRE Group Inc. represented landlord Prologis in the transaction. Tenant NEP Group, Inc. of Pennsylvania was represented by an outside broker. The property, called Van Nuys Distribution Center 2 at 7850 Ruffner Ave., features 10 dock-high loading positions, five ground-level doors, 21-foot ceiling clearance, heavy power and a gated yard. “The Ruffner location will house NEP’s US Mobile Units and Bexel divisions, both part of the NEP Broadcast Services operating segment of NEP Group,” said Carrie Galvin, chief strategy office at NEP, in a statement. “NEP US Mobile Units will service their fleet of mobile production trucks and the Bexel team will provide a wide range of broadcast solutions and production equipment rentals out of this location.” “This property’s vicinity to the Van Nuys Airport, the 101/405 interchange and Hollywood makes it an ideal location,” Robinson said in a statement. “There are fewer and fewer buildings, similar to this, with a central location, positive attributes and at least 100,000 square feet in the San Fernando Valley market.” In the past month, Robinson also facilitated two additional industrial leases, totaling 255,404 square feet, at Van Nuys buildings owned by the same landlord. The rapid increase of online streaming and video production services has more than doubled the industry’s annual demand in the greater Los Angeles region for industrial space, according to a recent CBRE report. That trend has impacted the San Fernando Valley. More than 1.7 million square feet of production space was leased in 2018 in the L.A. market, compared with 780,000 square feet in 2011, the CBRE report found. The U.S. industrial & logistics sector remained balanced in Q1, with 31.6 million sq. ft. absorbed versus 33.2 million sq. ft. delivered. The overall market’s availability rate remained at 7.0 percent —the lowest level since Q4 2000. The vacancy rate remained at 4.3 percent, maintaining its lowest level since CBRE began tracking this metric in 2002. The 33.2 million sq. ft. of new supply delivered in Q1 was down 48.6 percent quarter-over-quarter and 20.5 percent year-over-year. This confirms the discipline shown by developers and the low risk of late-cycle oversupply.The under-construction pipeline grew 4.6 percent quarter-over-quarter to 283.1 million sq. ft., another indication of stability on the supply side.Although supply and demand were in balance, net asking rents increased 2.2 percent in Q1 to $7.51 per sq. ft. —the highest level since CBRE began tracking the metric in 1989. Rents have increased 8.1 percent year-over-year, the highest growth rate in this cycle and well above the average annual growth rate of 4.4 percent since 2012. The continued strength of the U.S. dollar, rising nominal incomes and low inflation will likely lead to more imported goods, which bodes well for the industrial sector. Each dollar increase in imports consumes three times more warehouse space than each dollar increase in exports.