SANTA CLARITA VALLEY: Area Landlords Look to Next Year As Vacancy Rate Still Sky High

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The third quarter offered some relief for the Santa Clarita Valley, but brokers are now waiting out what they expect to be a period of little change to the region’s sky-high vacancy rate.

The valley absorbed about 57,000 square feet last quarter, bringing the vacancy rate down two points to 23.1 percent, according to Jones Lang LaSalle Inc.

But the large number of vacancies left landlords with little leverage and asking rents remained stable at $2.49. Kevin Fenenbock, a senior vice president at Colliers International, said he doesn’t expect conditions to improve until next year.

“My sense is that we’re at the bottom,” he said. “Things aren’t getting worse but they aren’t getting better. My anticipation is we’re going to be relatively flat unless we see one large tenant come into the market and absorb a bunch of space.”

The recent rental activity has been marked by small, short-term deals. But the region, which has suffered since large home-building tenants vacated the area during the housing bust, managed a large property sale last quarter.

American Assets Trust Inc. sold the 194,000-square-foot Valencia Corporate Center to Pacific Office Properties Trust Inc. for $31 million. The office complex had only been on the market for a few months. This was the most significant office sale since the recession, Fenenbock said. As such, owners watched the transaction closely to value their buildings.

“We’ve only been able to compare property valuations to the San Fernando Valley,” he said. “It does set the stage. A lot of people can compare their building to that building to see what things are trading at now.”

Santa Clarita is one of only a few L.A. markets with new property under construction. Sinanian Development of Tarzana is finishing an office building at 17901 Soledad Canyon Road in Canyon Country.

Sinanian bought the 103,000-square-foot project in June of last year after a group of investors foreclosed on the building. It should be finished by the end of the year, meaning even more space will be available.

Ryan House, vice president at Jones Lang LaSalle, said the region needs to find a find a tenant willing to sign a big lease of about 40,000 square feet to make the market appear more desirable.

“The biggest thing that it’s going to do is change the perception of the market,” he said. “Automatically when you get up into the 20-percent-plus vacancy range, it’s viewed as a tenant favorable market.”

MAIN EVENTS

  • American Assets Trust Inc. sold the Valencia Corporate Plaza to Pacific Office Properties Trust Inc. for $31 million. American Assets put the 194,000-square-foot office park at 2847 Avenue Stanford on the market during the second quarter. The three-building complex, which comes with amenities such as a gym and dining area, was 82 percent occupied.
  • Sinanian Development is finishing an office building at 17901 Soledad Canyon Road in Canyon Country. The Tarzana developer bought the 103,000-square-foot project in June of last year after a group of investors foreclosed on the building. It should be finished by the end of the year.
  • The Social Security Administration signed a 10-year lease for a 9,500-square-foot office in the Tourney Pointe building at 27200 Tourney Road in Valencia. Arden Realty owns the 220,000-square-foot building, which was built in 1985 and recently renovated.
  • A medical practice purchased a 79,000-square-foot office in the Rustic Canyon Business Park for $580,000. Intertex General Contractors Inc. was the previous owner of the first floor, Class B office space at 28212 Kelly Johnson Parkway in Valencia.
  • Bayless Engineering and Manufacturing bought a 22,700-square-foot industrial building for $2.5 million from RAH Industries. Bayless, a sheet metal fabrication and welding company, had already occupied the building at 26037 Huntington Lane as a tenant for six months and will not make any renovations to the space.
  • An undisclosed aerospace company has signed a one-year lease on a 1,200-square-foot office space at the Rye Canyon Pointe. The office, at 28212 Kelly Johnson Parkway, is part of the Rye Canyon Business Park and was built in 2006.

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