Editor’s Note: This story has been updated to correctly report the name of CBRE Group INc. executive vice president Craig Peters.
Fluctuations in the Santa Clarita Valley office market were minimal in the second quarter, confirming a trend toward stabilization. According to data from Jones Lang LaSalle Inc., the vacancy rate rose to 16 percent in the second quarter from 15.5 percent in the opening period, but still below the 18.7 percent recorded a year ago. That’s unlikely to change significantly any time soon.
“If a larger user comes into this market that needs 40,000 square feet or more of office space, there’s not an existing opportunity they could get right into,” explained Ryan House, a JLL vice president.
LNR’s planned Entrada Gateway Center is the only space possible at this point. Fully entitled, it could have something out of the ground in 14 to 16 months, House said. Several other projects have been poised to break ground for some time.
First quarter average monthly asking rent was $2.40 per square foot, down 3 cents from the prior period and $2.46 a year ago.
House attributed the decline to the absorption of space in higher-price buildings, leaving lower-cost sites to dominate the market.
“I’m not seeing any landlords lowering asking rents,” he said.
That trend will need to reverse in order to trigger additional office construction.
What activity there has been is from within the market, as companies continue to right-size or relocate around town.
“We have a lot of retail-office projects that are older – from early to mid-’80s – and tenants there are looking at more general office product or a more geographically desirable location,” House explained. Other tenants are vacating offices in warehouse-flex space in favor of straight office.
The industrial market is seeing a lot of demand, but also is short on immediately available inventory, according to Craig Peters, executive vice president at CBRE Group Inc.
“Growth in primary industry clusters such as entertainment, aerospace and biotechnology resulted in several companies in the SCV looking for additional space as well as companies from outside the area looking to relocate,” he said.
Two industrial leases were inked. JMG Specialties Inc., which manufactures supermarket, food service and materials handling carts and other items, expanded to 46,161 square feet at 29120 Commerce Center Drive in Valencia. Ram Board, maker of temporary floor and job site protection products, relocated from the San Fernando Valley submarket, taking 41,000 square feet at 27460 Avenue Scott in Santa Clarita. Terms were not reported.
The pent-up demand is expected to ease shortly.
“The second half of 2014 will see several new major industrial development projects break ground, which will add nearly 2 million square feet of space to the market over the coming years,” Peterson said.
Starwood’s Gateway V at the Valencia Commerce Center is scheduled to deliver four speculative buildings later this year or early next, and Needham Ranch and Sterling Gateway are expected to come on line in 2015.
– Margot Carmichael Lester
Santa Clarita Valley
JMG Specialties Inc. expanded to 46,161 square feet at 29120 Commerce Center Drive in Valencia. No terms were disclosed.
Ram Board relocated to 41,000 square feet at 27460 Avenue Scott in Santa Clarita. Terms were not reported.
The Beneda Lane Apartments, a 98 percent- occupied 30-unit multifamily property at 18071 Beneda Lane in Canyon Country, sold for $5.7 million, or $191,667 a unit. James W. Hayes sold the complex to the Berry Family Trust of Mill Valley in an off-market deal.
The 32,232-square-foot Class B flex-light distribution facility at 26308 Spirit Court in Santa Clarita traded for $2.3 million, about $73 a square foot. The William S. Hart Union High School District purchased the building from Midwest Partners.
The 13,092-square-foot Class B industrial warehouse at 24749 Avenue Rockefeller in Valencia traded for $1.4 million, or $109 a square foot. C. Stuart Young sold the property to the Graziano Family Trust.
