Investors Shopping for Retail Centers Boost High Desert Market

With a dwindling supply of industrial and office properties on the market, retail made the biggest splash in the Antelope Valley during the first quarter. The biggest deal in the area was the $8.4 million sale in March to a L.A. investment entity of a 3-acre Lancaster shopping center at 2036 W. Avenue K that features smaller tenants such as a Starbucks and Sprint store. Last month also saw Wal-Mart Stores Inc. close on the $1.3 million acquisition of a 5-acre parcel for a neighborhood food market in the planned 250,000-square-foot Rancho Vista Towne Center in Palmdale. Vincent Roche, senior director in the Bakersfield office of commercial real estate broker age Cushman & Wakefield Inc., said the transactions indicate that investors and national and regional retailers find the area attractive. “They look at the Antelope Valley as a place to grow and that offers a lot of opportunity for these businesses,” he said. One deal Roche worked on during the quarter was the sale of a 5-acre parcel at 730 W. Avenue P in Palmdale for a new shopping center. Roche has worked since 2007 with the property owner to sell the land. The recession made it tough to find a buyer, but with the economy picking up Rancho Vista Gateway LP of Newport Beach struck a deal for $4 million Tenants will include grocery chain Aldi, Dunn Edwards Paint and eateries Chick-Fil-A, Krispy Kreme, Yogurtland and The Habit, with most to open by the end of the year, he said. Also showing some improvement during the quarter was the industrial market, where the vacancy rate inched down three tenths of a point to 6.7 percent compared to last year’s fourth quarter as 39,500 square feet came off the market in a series of small transactions. Landlords helped things along, dropping average asking lease rates 3 cents to 47 cents a square foot, according to the L.A. office of Colliers International. Still, the market is plagued by some large vacancies, including a 130,000-square-foot building formerly occupied by a contract manufacturer. Two interested buyers had been in escrow on the property since it became available more than a year ago but didn’t close on the deal, said Dennis Marciniak, vice president in the Woodland Hills office of Daum Commercial Real Estate Services. “There is a third party that has come into the picture that we are expecting an offer from,” Marciniak said. “We are now at a point where one of the three will go this time around.” The office lease market, meanwhile, was virtually stagnant. The vacancy rate was unchanged at 14.1 percent, while about 200 square feet came back on the market. The sluggish activity can be explained by a shortage of properties available, which also could explain why landlords were able to raise asking lease rates 4 cents to $1.82 a square foot. Marciniak said there is so little product there is talk of developers poking around to possibly put up build-to-suit buildings in the 20,000 square foot to 40,000 square foot range. – Mark R. Madler Main Events The 20th and K Marketplace in Lancaster sold for nearly $8.4 million in March. The retail center was purchased by K & 20 Lancaster LLC of Los Angeles from PASSCO Cos. LLC of Irvine. The 28,753-square-foot center at 2036 W. Avenue K was built in the early 1990s on nearly 3 acres. In January, a 5-acre piece of land in Palmdale traded hands for about $4 million. The development site at 730 W. Avenue P was bought by Rancho Vista Gateway LP of Newport Beach from Theodora Eliene Papastathis of Santa Ana. In the months since purchase, the developer has constructed a shopping center that will include a Chick-Fil-A, Krispy Kreme, Yogurtland and The Habit. Last month, Bentonville, Ark. retailer Wal-Mart Stores Inc. purchased a nearly 5-acre land parcel for an outlet in Palmdale as part of the planned 250,000-square-foot Rancho Vista Towne Center development at 40264 Homeridge Drive. The Wal-Mart site was purchased for about $1.3 million from R Y Properties Inc. of Alhambra. In January, a two-property portfolio in Palmdale fetched $1.2 million. The medical office buildings at 1220 and 1224 E. Avenue S were bought by Kr Real Estate Syndicate LLC of Palmdale from Schmidt & Stacy Consulting Engineers Inc. of Dallas. The buildings had less than 50 percent occupancy at the time of sale. After being foreclosed on, a two-property portfolio consisting of a roughly 13,000-square-foot medical office building and a small parcel sold in January for $1.3 million. The properties at 43944 15th West in Lancaster were purchased for Azriel LLC of Santa Monica from TD Service Co. of Santa Ana, which foreclosed on the property for more than $3 million, according to CoStar. The medical office space built in 2009 is vacant. Antelope Valley Industrial Market At a Glance Inventory 4.59 million square feet Under Construction 0 Class A Asking Rents 47 cents