SANTA CLARITA VALLEY: Developers Head North for Industrial Projects

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Office Market At a Glance


Inventory:

2.2 million


Under Construction:

183,000 square feet


Class A Asking Rents:

$2.78

Once upon a time the Santa Clarita Valley was a developer’s paradise, but it looks like the dirt, at least for industrial builders, is running out.


The region’s largest landowner, LNR Property Corp./Newhall Ranch, has shown a clear preference for residential, retail and office entitlements, leaving only a few hundred acres in their coffers for industry, experts say. That means future development may be even farther north but will users follow?


“With industrial vacancies below 3 percent, growth can only go up the Golden State (5) and Antelope Valley (14) freeways,” observed John DeGrinis, senior vice president with Colliers International in Encino. “There’s been developer interest in places like the Antelope Valley, but it’s mixed as to whether user demand exists in a meaningful way.”


One test may well be the first quarter announcement of the Tejon Industrial Complex, a 606,000-square-foot development at 4059 Industrial Parkway Drive in Tejon Ranch. The project, to break ground in about a month, is next to a 1.7 million-square-foot distribution center for home retailer Ikea, and part of a massive 1,450-acre master planned site that will allow for 20 million square feet of combined industrial and office space.


Not that Santa Clarita office users are going anywhere: commercial vacancies were down by more than 3 percentage points compared to the same period in 2006, as Class A asking rents spiked from $2.56 to $2.78 per square foot. That’s a 15 percent jump from what tenants were paying last year.


“Until the next wave of office product comes online supply will remain constrained, and rents will keep going up,” said Matthew Heyn, vice president for CB Richard Ellis Group Inc.



MAIN EVENTS

-Tejon Ranch Industrial Complex, a 606,000-square-foot spec site from Tejon Ranch Co. and Rockefeller Development Group, hit the market in the first quarter. North of Santa Clarita Valley along the Golden State (5) Freeway, the project is part of a huge 1,450-acre master planned site that has been entitled for industrial and commercial use.

-The U.S. General Services Administration signed on for 5,376 square feet at Gateway Plaza, a newly constructed, two-building, 100,000-plus-square-foot Class A office campus at 25350 Magic Mountain Parkway in Valencia. The five-year lease, from Tourney Road Investments, helped push the rent past $4 dollars per square feet, which bests commercial hotbeds such as Warner Center.

-Hopkins Real Estate Group and Rockwood Capital broke ground on a 500,000-square-foot retail shopping center on Palmdale’s east side. The 50-acre site, at 47th Street East and Avenue R in Palmdale, will house a 172,000-square-foot Super Target store, along with other large retail anchors.

-Arden Realty Inc. listed Sunset Pointe Plaza, a 58,105-square-foot Class A office building at 25129 Old Road in Newhall. Given recent Valencia sales comps of similar Class A product. The Commons and Town Center, brokers said Sunset Pointe should trade in excess of $300 per square foot.

-Santa Clarita-based JSB Development closed escrow on 7 acres in the Valencia Industrial Center, a 1,200-acre-business park located just south of Highway 126. Consideration was approximately $5 million.

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