Tight Territory

A quiet residential community dotted with business parks and a high profile thanks to reality television, Calabasas as a commercial real estate submarket may be a victim of its own popularity.“It’s a highly desirable location. Now the problem is that we don’t have any land,” said Calabasas-based Newmark industrial broker John DeGrinis.Totaling about 13 square miles, Calabasas is a quaint town wedged between the 101 freeway and the coastal enclave Malibu with Agoura Hills to its west and Woodland Hills just east.

Calabasas is also the newest city in L.A. County. Incorporated in 1991, the name Calabasas predates its official city status by more than a century, when it took its name from a 1795 ranchería. The Leonis Adobe structure in Old Town Calabasas dates from 1844 and remains one of the oldest surviving buildings in the region.

Like the adjacent Malibu, Calabasas has taken on a celebrity awareness because of its celebrity residents, including reality television’s Kardashian family musicians Kanye West, Dr. Dre and Justin Bieber; and actor Ken Jeong. The rustic, small-town feel and hills have made it a favorite residence for the rich and famous.In the real estate industry, Calabasas has become hot destination and, in fact, the pandemic year, which saw young adults eschewing urban areas for L.A.’s suburbs, may have heightened its desirability.Large-scale salesOne of Calabasas’ splashiest commercial property sales in years was just sealed in April.Rising Realty Partners and Fortress Investment Group sold Park Calabasas – a 225,000-square-foot office campus sprawled across more than 20 acres – for $79 million. The property’s buyer is Pasadena-headquartered Gemdale USA, the subsidiary of China-based Gemdale Corp., which has retained Christopher Rising’s company to manage the property.“When we acquired this campus, it was outdated with a floor plan for a financial company — a very closed office,” Rising said in a statement. “Our team had a bigger vision for this campus to give it life and make an impact through property improvements and programming. This campus was a proof point that our impact strategy model works in urban settings as well as suburban office parks.”Newmark’s Co-Head of U.S. Capital Markets Kevin Shannon, Executive Managing Directors Ken White and Rob Hannan and Senior Managing Director Laura Stumm represented the sellers while Newmark’s Vice Chairman David Milestone and Senior Managing Director Brett Green secured the acquisition financing on behalf of Gemdale USA.“The buildings that Rising had were former Lockheed Martin headquarters,” DeGrinis said.Located at 4500 Park Granada, the property was acquired by Rising in 2013 as part of a portfolio from Bank of America. Rising Realty Partners had transformed it from a vacant single-tenant alignment into the multi-tenant campus. New tenants since the renovation include river cruise line AmaWaterways, which has its headquarters on the premises; Coty, the beauty company; co-working entity Spaces; and worker’s compensation insurance agency Republic Indemnity.Another notable transaction occurred a month earlier in March, when a two-story office building at 26050 Mureau Road within a business park sold for $12.7 million, or $271 per square foot.The asset, which sits on 1.6 acres, offers 46,899 square feet and includes a training center, boardrooms, fitness center, server rooms, employee lounge and outdoor patio.Lee & Associates-LA North/Ventura principal Jay Rubin and Associate Eugene Kim led the team representing the seller, Crusader Insurance Co., in the transaction, while Craig Miller and Todd Cobin of Stone Miller represented the undisclosed buyer.The listing brokers said that this facility’s location has become ideal in the wake of the COVID-19 outbreak as employees shift from wanting to be based in an urban live/work/play center to more suburban environs.“Calabasas has become one of the most sought-after communities in Los Angeles,” Rubin said in a statement. “With the evolution in the office market we are experiencing, companies are looking for these types of opportunities to invest in an office that gives them greater control of their environment and flexibility for their business.”Last December, 4895 N. Las Virgenes Drive, a property that served as the longtime host of a Coco’s restaurant, sold for $3.28 million. The 1977-built vacant restaurant building has 6,243 square feet of retail space.Michael Sharon of illi Commercial Real Estate handled the transaction on behalf of the sellers, private entities Hameramir and Planet Estate Realty. Buyer Salsa and Beer restaurant was represented by Remax Commercial’s Tal Yona and Fernanda Otalora.“Calabasas has always been hot for both industrial and office,” said Lee & Associates LA North/Ventura industrial broker Mike Tingus. “Much stronger than Woodland Hills or Agoura Hills.”And much more expensive, said DeGrinis, whose Newmark team of industrial agents Patrick DuRoss, Jeff Abraham and Kate Borden have become well versed with Calabasas – not only closing huge deals there but relocating their office from Warner Center to 24025 Park Sorrento in April of last year.“The rent for this area is substantially higher than Warner Center,” DeGrinis added. “It was never an industrial location but more a flex R&D location, and it’s evolving toward 100 percent office.” Tingus with Lee colleague Grant Fulkerson and Sheryl Mazirow, principal at Westlake Village-based Mazirow Commercial Inc., closed a major lease at one of those flex R&D spots earlier this year. HRL, previously known as Hughes Research Laboratories, moved into 26800-26850 Agoura Road, owned by Cypress Land Co.

“Life sciences want to be in the Conejo Valley,” Tingus said. “It was the only building vacant in that market. That’s why it leased so quickly.” “Calabasas is the first stop out of the city of Los Angeles,” continued Tingus. Therefore, for many companies, “the cost of doing business in Calabasas is lower than in L.A.”Both Tingus and DeGrinis point to community amenities such as The Commons at Calabasas, a Caruso experiential outdoor retail center, and various restaurants, retail storefronts and corporate services as an attractive draw to the community.

“Campuses with amenities are really important,” Tingus said.

However, trying to buy or lease into Calabasas has become challenging, said the brokers, who each characterized the submarket as “very tight.”DeGrinis noted that many high net-worth business executives and investors live in Malibu, making Calabasas a quick trip over the hill.But for now, the office inventory remains low.“There hasn’t been a lot of churn,” DeGrinis said. “There are not a lot of large buildings.”