As Los Angeles continues its urban sprawl, commercial real estate in the Santa Clarita Valley continues to thrive. Corporate relocations and industrial expansions in the northern reaches of Los Angeles County are lowering vacancy rates and triggering construction projects.
"There has been a huge amount of interest in the area over the last year," said Marlee Lauffer, a spokeswoman for Newhall Land and Farming Co., a major property owner in the area. "A lot of companies are moving out of the San Fernando Valley or are expanding operations here."
Vacancy rates confirm the market's strength. According to CB Commerical Real Estate Group Inc., the industrial vacancy rate in Santa Clarita Valley is hovering around 1 percent a 0.2 percent decrease from three months ago.
The Valencia Commerce Center and Valencia Industrial Center, with 300 acres between them, have a combined vacancy rate of 1.2 percent, according to Newhall Land.
Industrial space has been in such high demand in the Santa Clarita Valley that a spate of development projects have begun especially in the Valencia Commerce Center. A new 60-acre subdivision of the 30-year-old Commerce Center is now being graded.
Doug Sonderegger, senior vice president of CB Commercial, reports that most of the parcels in the subdivision are already in escrow or in negotiations to be sold.
Newhall Land began a 400,000-square-foot speculative industrial project at the Commerce Center. No tenants have signed contracts, but Lauffer said Newhall Land is confident that they will be able to secure tenants because the area's vacancy rate is so low.
EJM Development Co. also has launched a speculative project in a section of the Commerce Center called Commerceplex I. The company broke ground on warehouses at two separate sites that total 10 acres. The buildings will have a collective 200,950 square feet of space and cost more than $10 million to construct. The project is scheduled to be completed in six months.
Long considered an industrial center rather than an office center, the Santa Clarita Valley has significantly higher office vacancy rates, pegged at 13 percent, according to Grubb & Ellis Co.
However, Newhall Land's Lauffer predicted that office vacancy rates will drop over the next year as the Princess Cruises development in Valencia progresses.
Newhall Land broke ground in September on the six-story, 130,000-square-foot facility that will house Princess Cruises' entire 600-employee customer service division, the first major corporate operation to set up shop in the Santa Clarita Valley. The building, on a site close to Valencia's Town Center Drive, is slated to be complete in November 1998.
The newly expanded Town Center Drive, a half-mile-long commercial corridor near Valencia's Town Center mall, continues to lease its space. In July, the Spectrum Club, a health club, moved into a 57,000-square-foot space there. Hyatt Hotels has begun construction of a six-floor, 250-room hotel adjacent to the center.
Retail areas in Valencia are also growing. The new Valencia Marketplace continues to fill its space and is 75 percent occupied. A Vons supermarket is the most recent tenant.
Although its commercial real estate market has been relatively stagnant compared to the Santa Clarita Valley, the Antelope Valley has a couple of large-scale industrial projects underway.
"One major relocation and one major expansion project are under construction around Palmdale," said Vern Lawson Jr., executive director of the Antelope Valley Economic Development Corp.
Electronic-components manufacturer Senior Systems Technology Corp. is relocating its Chatsworth facilities to Palmdale, diversifying the aerospace-dominated area. The company will be transferring 300 employees to the 120,000-square-foot industrial facility, which will be completed in nine months.
In Lancaster, Texas-based Michael's Store Inc. broke ground on a 432,000-square-foot warehouse in the 800-acre Fox Field Industrial Corridor. The self-financed distribution center will bring 150 jobs to the area, according to Douglas B. Sullivan, executive vice president of Michael's. The building will be completed next summer.
"Michael's is the first tenant at the corridor," said Lawson. "It should act as a catalyst to attract other companies to this new area."
Real estate agents throughout the north county area believe market activity will continue to grow through the fourth quarter.
"There are a lot of land sales right now, but we're going to see even more activity by the year end," said CB's Sonderegger. "A lot of properties currently are in escrow or are having contracts drawn up, so their deals will close in a couple months."
- Newhall Land and Farming Co. began a 400,000-square-foot speculative industrial project at the Valencia Commerce Center.
- EJM Development Co. broke ground on a speculative industrial project in a section of the Valencia Commerce Center called Commerceplex I. The $10 million project consists of two warehouses with a combined 200,950 square feet of space. It is scheduled to be completed in six months.
- Newhall Land broke ground on a six-story, 130,000-square-foot building to house Princess Cruises' entire 600-employee customer service division. The building is slated to be complete in November 1998.
- The Spectrum Club moved into a 57,000-square-foot space on Town Center Drive in Valencia.
- Hyatt Hotels began construction of a six-story, 250-room hotel in Valencia.
- Senior Systems Technology Corp. decided to relocate its 300-worker Chatsworth operation to a 120,000-square-foot industrial facility now being built in Palmdale. The facility will be completed in nine months.
- Michael's Store Inc. broke ground on a 432,000-square-foot warehouse in the 800-acre Fox Field Industrial Corridor in Lancaster. The building will be completed next summer.
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