A Dallas-based real estate investment trust has bought more than 466,000 square feet of industrial space in Santa Fe Springs, continuing a trend of REITs being the big newsmakers in L.A.-area commercial real estate.
Prentiss Properties Trust, a publicly held REIT, said it paid $17.3 million for six industrial buildings known as the Colonnate II industrial park. The company plans to remodel some of the space, raze other portions and build additional space, according to David Robertson, senior vice president at Prentiss’ Torrance office and head of the western region.
Robertson pointed out that the Santa Fe Springs property is in a market known as Mid-Cities, which has been among the first Southern California industrial markets to come back after the recession, according to brokers and developers.
Robertson said the buildings, which range from 52,000 to 168,000 square feet, will be returned to Class A status to meet the demand for warehouse space with higher ceilings, more loading docks, more-efficient fire sprinkler systems and other features that industrial users are demanding. The largest of the buildings, a truck terminal on a 13-acre site, will be razed and replaced by a 270,000-square-foot warehouse.
Robertson said the growth in the Mid-Cities market prompted the Prentiss purchase, saying the company sees continuing demand for “new, state-of-the-art warehouses” there. He said the company’s development plans will increase total square footage at the site by about 22 percent.
The Prentiss project will be the latest in a series of industrial developments that began about a year ago in the Mid-Cities market, which includes cities in both L.A. and Orange counties.
Darla Longo, a senior vice president with the City of Industry office of CB Commercial Real Estate Group, says the market languished during the recession because it formerly relied on aerospace tenants and small subcontractors serving the defense industry. But demand for large warehouse and distribution centers has taken up the slack, and speculative building began about a year ago, with a number of new “big box” projects either under way or planned.
Just one example, Longo says, is the recently completed Mid Counties Business Park, a 510,000-square-foot project in Santa Fe Springs, developed by Pasadena-based Wohl Properties Group and slated to be sold to Prudential Real Estate Investors “probably within a few days,” according to a development agreement.
“This is probably one of the hottest industrial markets in Southern California,” Longo says, explaining that big distribution firms and “a whole cross-section of industries” have more than made up for the loss of the “lots of little aerospace job shops” that formerly drove the market.
Home builders to merge
Los Angeles-based home builder Pacific Greystone Corp. last week agreed to be acquired by Miami-based Lennar Corp. in a deal estimated at more than $200 million.
The merger would create the largest home builder in the nation, based on 1996 earnings before interest and taxes, and the nation’s fifth-largest home builder based on 1996 home building revenues, the companies said.
The deal calls for Pacific Greystone shareholders to receive 1.138 shares of Lennar stock for each share of Pacific Greystone. The deal is expected to close in the fourth quarter, subject to shareholder approval.
Jack R. Harter, chairman and chief executive of Pacific Greystone, already one of California’s 10 largest home builders, said in his company’s announcement that the merger will help to establish the merged firm as “a pre-eminent builder in the sunbelt markets” of California, Florida, Texas, Arizona and Nevada.
High-tech deal
Among the companies taking up space formerly occupied by defense firms in the Mid-Cities and South Bay markets are high-tech companies like Torrance-based Creative Computers, which has signed a 10-year lease valued at $12.5 million for 151,800 square feet of space occupied by aerospace firm Allied Signal at 2525 190th St. in Torrance.
Broker Crag Poropat of the Lee & Associates South Bay office, who represented Creative Computers, said the deal calls for the company to move into the building in phases, as Allied Signal moves out. Creative Computers, which is expanding and relocating its headquarters operations in Torrance, will move into 60,000 square feet of the Allied Signal space the first year, 38,300 square feet in the second year and the remainder in the third year of the lease.
Creative Computers is a publicly held mail order and retail computer hardware and software company that has grown from $38 million in sales in 1992 to nearly $445 million for the year ended Dec. 31, 1996, according to the company’s latest Form 10-K report.
Cruising to Valencia
Newhall Land and Farming Co. will build a six-story, 130,000-square-foot office building in Valencia to house the Princess Cruises customer service center when the cruise company moves from Century City, according to announcements by Newhall Land and Princess.
The relocation, expected to be completed by the fall of 1998 and to bring 600 new jobs to Valencia, is the biggest move of an employer to Santa Clarita in 10 years, according to the announcements. The cruise line said it needs more space because business is booming: The number of Princess berths has tripled over the past eight years, according to President Peter Ratcliffe.
The new Princess building will be on Town Center Drive, adjacent to Newhall Land’s Valencia Town Center, a 790,000-square-foot regional mall. Newhall Land officials said the cruise line’s location is one of several such office buildings planned for Town Center Drive, where a 250-room Hyatt Hotel, a 55,000-square-foot Spectrum Health Club and a 100,000-square-foot entertainment center, including an IMAX theater, are located.
Valley apartments heating up?
The recent sale of a 200-unit apartment complex in Tarzana for $7.6 million suggests the market for apartment buildings may be reviving in the San Fernando Valley, according to Ziv Kozaski, one of three agents in the Sperry Van Ness Encino office who negotiated the sale.
Kozaski said the complex was only on the market a month and was sold despite complicated negotiations that included three different sellers, all individual investors, and five different lenders. The buyer was Tarzana Five LLC.
According to Kosaski and Raffi Krikorian, managing director at the Sperry Van Ness office, the sale price of $38,100 per unit is substantially higher than per-unit prices paid for other nearby apartment complexes recently. He said prices have been running about $20,000 to $25,000 per unit, although it’s not an apples-to-apples comparison because many of the other buildings were seriously damaged in the Northridge earthquake while the Tarzana Villas complex was not.
Kozaski, Mike Rosenthal and Steve Waterman represented both sides in the deal.
Bob Howard is a frequent contributor to the Business Journal and will be reporting on real estate developments in the coming weeks.
