Third quarter indicators led market watchers to believe the San Fernando Valley’s commercial bottom was in sight, albeit not without another round of the “no pain-no gain” that’s haunted the region for much of 2009.
“Leasing has picked up,” confirmed Stacy Vierheilig-Fraser, senior managing director at Charles Dunn Inc. in Studio City. “But it’s still mostly bottom fishers looking to move to less expensive space. The REO/short-sale comps we’re now seeing may drag the market (down further). But I think appraisers are making adjustments for those kinds of deals.”
Clearly, the biggest open wound continues to be the West Valley, where vacancies soared to 21.7 percent, five full percentage points higher than the same period last year, according to Grubb & Ellis Co.
Year-to-date net absorption in that submarket plumbed deep red numbers at – negative 385,854 square feet – more than double the amount in quarter three of 2008. All of which made for a renter’s market for firms that hadn’t yet closed up shop.
“There’s continuing flight to lower (rents) as companies search for ways to reduce fixed overhead costs,” said James A. Connor, vice president at Daum Commercial Real Estate in Woodland Hills.
Savvy veterans who have lived past boom-bust cycles have deemed it the right time to dive back in. Younan Properties Inc., a privately held commercial investment firm that sold off most of its L.A. portfolio at the height of the bubble, bought back WarnerView Corporate Center at 5959 Topanga Canyon Blvd. The $190 per square foot price was 7 percent less than what Younan paid in October 2004.
Office Market At a Glance
Inventory: 28.3 million square feet
Under Construction: 180,000 square feet
Class A Asking Rents: $2.48
- Woodland Hills-based investment firm Younan Properties Inc. repurchased a prime Class A West Valley building it sold nearly five years ago. The 62,510-square-foot
WarnerView Corporate Center, at 5959 Topanga Canyon Blvd., was sold for $11.9 million, or about $190 per square foot, by Value Home Loan Inc. Value had bought the building from Younan in October 2004 for $12.5 million, or about $9 more per square foot. The site was 93 percent leased at closing.
6842 Van Nuys Blvd., a 174,244-square-foot office building and parking garage, was sold by Dunham & Associates Investment Counsel Inc. after the San Diego lender foreclosed on the previous owner. A group of individual investors paid $13.5 million for the Class B office property, which is only 25 percent leased. Sources said the buyers plan to invest $3 million in tenant improvements before leasing commences.
GGB Medical Management Services inked 15,063 square feet of space at 9301 Oakdale Ave. in Chatsworth. Total value of the 78-month deal from Monumental Life Insurance Co. was $1.8 million, including two months free rent.
First American Title Insurance sold 19850 Plummer St. to GEMC 2005-C1 Plummer Street for $9.29 million, or about $116 per square foot. The 80,000-square-foot single-tenant parcel last sold in January 2005 as part of a three-building portfolio for $63.5 million ($238 per square foot).
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