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Monday, Apr 22, 2024

Big Bang Theory at Play in Core San Fernando Valley Market

The fourth quarter started off with a bang for the San Fernando Valley office market, and things have yet to slow down. In October, the 35-story 10 Universal City Plaza tower was acquired by media giant Comcast Corp. of Philadelphia for $395 million, making it the largest single-property sale in the San Fernando Valley in more than a decade. Statistically, the improvement was broad, with the east, central and west areas of the Valley all experiencing falling vacancies during the quarter. All in all, about 89,000 square feet of office space came off the market, pushing the overall vacancy rate down four tenths of a point to 15.5 percent – and down from 17.9 percent a year earlier, according to the L.A. office of Colliers International. About the only metric that was a bit of a disappointment was asking lease rates, which only inched up a penny to $2.27. “The market is normalizing,” said Jeff Albee, executive vice president at the Woodland Hills office of Sperry Van Ness International Corp. “But the rates will stay where they are for awhile. Concessions from landlords are falling away, but we’re not quite at the market where rents will rise. That’s still coming.” The star of the show was the central Valley, where nearly 40,000 square feet was taken off the market, dropping the vacancy nine tenths of a point to 9.3 percent. The submarket also was the site of a decent sized sale. The headquarters of struggling sporting goods manufacturer Easton-Bell Sports Inc. was sold for $12.4 million. Private investor VNSH LLC of Los Angeles acquired the 80,000-square-foot building at 7855 Haskell Ave. in Van Nuys from Easton Foundations. The company has no plans to vacate the space. Albee predicts the Valley office market will continue to perform strongly, with the vacancy rate falling another two points this year. “There’s been substantial movement,” he said. There also was activity on the retail front, as York Capital Management of New York bought a 55,000-square-foot retail property in Sherman Oaks for $32.5 million in November. The property at 4500 Van Nuys Blvd. was sold by Hughes Avenue Associates Inc. of Los Angeles and is fully leased to Best Buy Co. Inc. of West Saint Paul, Minn. The Valley’s industrial market had a bounce-back quarter, taking more than 582,000 square feet off the market and pushing the vacancy rate down five tenths of a point to 3.3 percent. But much like the office market, the industrial sector was defined by large sales as debt is still relatively cheap. In November, the 173,262-square-foot Mission Industrial Park in Northridge sold for $19 million. The 8733-8845 Shirley Ave. property was purchased by Hunter Columbia Business Park of Beverly Hills. A collection of 17 mostly Class C warehouses, the property was built in 1973 and was 99 percent occupied when it was sold by 8733 Shirley Investments LLC. More than 30 tenants fill the nearly 130-acre park, which features units ranging from 2,500 square feet to 10,000 square feet. David Hoffberg, the listing broker on the Mission Industrial deal and senior vice president at the Van Nuys office of Delphi Business Properties Inc., said the market is healthier than it has been in years. “Leasing activity is starting to pick up, but the bulk of the activity has been on the purchase side because of the low interest rates,” he said. “I expect the same level of demand to buy will continue into the new year.” Despite the successful quarter, industrial asking rates were flat at 61 cents. Hoffberg said that number won’t rise until rising interest rates make buying a less viable option. – Elliot Golan -Main Events The 35-story tower at 10 Universal City Plaza sold to media conglomerate Comcast Corp. of Philadelphia for $395 million in October. That price made it the largest single-property sale in the San Fernando Valley in more than a decade. It is the tallest office building in the Valley and home of Comcast’s NBCUniversal arm. The purchase was made from Normandy Real Estate Partners of Morristown, N.J. NBCUniversal has about 425,000 square feet of the 813,892-square-foot tower. In November, the founding family of Easton-Bell Sports Inc. sold off the headquarters of the struggling sporting goods manufacturer. Easton Foundations, led by the former owner of the company, sold the 80,000-square-foot Easton Building at 7855 Haskell Ave. in Van Nuys for $12.4 million to a private investor, VNSH LLC of Los Angeles. The three-story building was constructed in 1986 and is fully leased with Easton occupying about 85 percent of the space. The company has no plans to vacate the building. York Capital Management of New York bought a 55,000-square-foot retail property in Sherman Oaks for $32.5 million in November. The property at 4500 Van Nuys Blvd. was sold by Hughes Avenue Associates Inc. of Los Angeles and is fully leased to Best Buy Co. Inc. of West Saint Paul, Minn. The 173,262-square-foot Mission Industrial Park in Northridge sold for $19 million. The 8733-8845 Shirley Ave. park was purchased by Hunter Columbia Business Park of Beverly Hills. A collection of 17 mostly Class C warehouses, the property was built in 1973 and was 99 percent occupied at the time of sale. It was sold by 8733 Shirley Investments LLC in November. More than 30 tenants fill the nearly 130-acre park. San Fernando Valley Office Market At a Glance Inventory: 22.7 million square feet Under Construction: 0 Class A Asking Rents: $2.27

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