Main events in Los Angeles County’s submarkets.
Average asking rates for office space in Santa Clarita continued to yo-yo like the SlingShot ride at Magic Mountain in the third quarter.
Landlords asked an average of $2.36 a square foot in the most recent period. That was the latest stop on a ride that saw rates swing from $2.40 at the end of last year to $2.27 in the opening quarter of this year and all the way up to $2.46 in the second quarter, according to data from Jones Lang LaSalle Inc.
All this motion was mirrored in the vacancy rate, which bounced between 16.4 percent at the end of the year to 18.7 percent in the second quarter (when asking rates were at the lower end of the range) and back down to 16.6 percent in the third quarter.
But it’s not as if landlords are slashing prices, asserts Ryan House, a Jones Lang LaSalle vice president.
“We’ve had large blocks of top-tier space come off the market, and when that happens, everything that’s left in that middle range brings the average asking rate down,” he said. “The remaining landlords just aren’t at the higher numbers.”
One deal at Entrada Gateway provides a case in point. Landlord LNR Property Corp. has been asking around $2.75 per square foot, according to House. In the third quarter, Sunkist Growers Inc. purchased the 96,000-square-foot building at 27770 N. Entertainment Drive from LNR for $21.9 million.
“There’s 50,000 square feet of available space within the building and (Sunkist) bought the building with intention of occupying the vacant square footage for its own use,” he said.
House expects things to stabilize as the end of the year approaches.
“I don’t think we’ll see a huge decrease in vacancy rate … because there’s not much activity that’s considered net new absorption,” he said. “There’s activity, but it’s all tenants already within the market. The biggest thing may be that there are really no projects under construction. I don’t see anybody willing to do a spec building at this point in time.”
That’s definitely not the case on the industrial side, where “huge user demand coupled with the low vacancy rate are driving the development of several new industrial projects,” said Craig Peters, executive vice president for CBRE Group Inc.
Starwood’s Gateway V development at the main entrance to the Valencia Commerce Center will deliver four speculative buildings ranging from 60,000 square feet to 250,000 square feet in next year’s fourth quarter. The buildings will be offered for sale or lease, he said.
Two other developers expect to offer properties for sale or lease in early 2015. Needham Ranch will begin land development next year for 30,000- to 300,000-square foot buildings, and Sterling Gateway is constructing spaces to accommodate tenants seeking 90,000- to 200,000-square foot floorplates.
“All of these buildings will offer state-of-the-art features including 30- to 32-foot minimum clearance, upgraded fire protection systems and exceptional trucking,” Peters said.
One notable industrial sale occurred in the third quarter. The 27,000-square-foot Class B industrial/warehouse building at 20758 Centre Pointe Parkway traded for $2.9 million. The property was sold by Mauricio Hernandez to 20758 Centre Point Parkway, a limited liability corporation. The property last sold for $2.2 million in October 2002.
– Margot Carmichael Lester
