The Santa Clarita Valley commercial market continues to exhibit signs of stabilization, fueling increases in asking rates and decreases in concessions.
“Continued positive absorption is occurring, so the number of lease opportunities continues to narrow,” said Ryan House, a vice president at Jones Lang LaSalle Inc.
According to the firm’s research, year-to-date net absorption was 23,018 square feet at the end of the first quarter. House said he expected that trend to continue throughout the year.
Average monthly asking rates for Class A office space rose to $2.43 per square foot in the opening period from $2.37 the prior quarter and $2.27 a year ago.
The vacancy rate continued ticking downward, clocking in at 15.5 percent in the first quarter from 16.3 percent in the fourth quarter and 17 percent 12 months prior.
House attributes the decline to organic growth and expansion of existing tenants within the market.
Evidence of the tightening was found at 28515 Westinghouse Blvd. in Valencia, where sole tenant Advanced Bionics inked an early renewal. The company, which develops cochlear implant technology to restore hearing, renewed its 146,000-square-foot lease in a 10-year deal. Terms were not disclosed.
“This signifies the long-term occupancy of another large-space occupier within the market,” House said.
The Class A office building also traded during the quarter. Heitman sold it to Cole Real Estate Investments for $44 million, or $300.58 per square foot.
Two industrial-warehouse sales also were recorded in the first quarter.
The 24,000-square-foot Class B warehouse building at 21130 Centre Pointe Parkway in Santa Clarita was acquired for $3.1 million, or $129.08 a square foot. Sheldon Mechanical Corp. sold the property to the Harold and Bonnie Pease Trust.
The Panattoni building at 24971 Avenue Stanford in Valencia also traded. Heartland Precision Fasteners bought the 20,415-square-foot Class C property for $2.1 million from Russell-Warner Inc. The facility, which is 70 percent office and 30 percent warehouse, went for $102.87 a foot.
Industrial landlords are banking on increasing demand – and, thus, higher rents – to ensure good returns on their investments.
“Even though demand is high, limited (lease) activity in Q1 is the result of the extreme shortage of supply,” said Craig Peters, executive vice president at CBRE Group Inc. “The overall vacancy rate for Valencia industrial space stands at 2.4 percent. Demand continues to stack up, waiting for either existing product to become available or new buildings to be delivered.”
Three new projects expected to break ground this year could dramatically increase inventory.
“Starwood will commence construction on its Gateway V project, consisting of four buildings totaling more than 500,000 square feet, commencing with the first two buildings in the third quarter,” Peters said. “In addition, the first phases of both Sterling Gateway and Needham Ranch will break ground. Sterling will prepare to start its first three buildings by late in the year. Needham will be delivering 54 acres in its first phase, which could deliver as much as 1 million square feet in 2015.”
Main Events
The Class A office building at 28515 Westinghouse Blvd. in Valencia was sold to Cole Real Estate Investments for $44 million by Heitman. Advanced Bionics inked an early renewal of its 146,000-square-foot lease there in a 10-year deal for undisclosed terms.
The 24,000-square-foot Class B warehouse building at 21130 Centre Pointe Parkway in Santa Clarita sold for $3.1 million. Sheldon Mechanical Corp. sold the property to the Harold and Bonnie Pease Trust.
Heartland Precision Fasteners bought the 20,415-square-foot Class C property at 24971 Avenue Stanford in Valencia for $2.1 million from Russell-Warner Inc.
The 7,304-square-foot retail-restaurant building at 23430 Valencia Blvd. sold for $2.5 million or $345.70 per square foot. Island River Properties bought the property from the D’Egidio Trust.
