Staff Reporter

With space tight for factories and distribution centers throughout much of Los Angeles County, the Antelope and Santa Clarita valleys had a hot first quarter for industrial development.

In the Antelope Valley, ground was broken on several new industrial projects in the first three months of 1998, including a 15,600-square-foot adhesive-tape manufacturing plant, a Rite Aid Corp. distribution center and a Frito Lay distribution center. All of those projects are being built in Lancaster.

"We have virtually no industrial space available in Lancaster, so we're anxiously awaiting some (speculative) industrial developers to discover us," said Lancaster City Manager Jim Gilley, adding that the city currently has no vacant industrial spaces available with more than 10,000 square feet.

Meanwhile, in Valencia, construction continued on the Valencia Commerce Center industrial park. In the first quarter, 1.2 million square feet of the center, which has the potential to contain a total of 12 million square feet when built out, was under construction. Another 1.8 million square feet of the project already has been built, and it had a vacancy rate of less than 1 percent in the first quarter, said Marlee Lauffer, spokeswoman for Newhall Land and Farming Co., which is developing the industrial park.

Lauffer said she could not disclose who is in talks to move into the new section of Valencia Commerce Center, because some are in escrow and some are still in negotiations. "There are some companies from the San Fernando Valley that have expressed interest," she said, adding that all of the prospective tenants are light manufacturers.

Meanwhile, Valencia Industrial Center, a 9 million-square-foot industrial park near the Valencia Commerce Center, had a vacancy rate of 1.5 percent during the first quarter, according to Grubb & Ellis Co. That center has the potential for an additional 1 million square feet of space, but no new construction was started there during the first quarter, Lauffer said.

The entire Santa Clarita Valley had an industrial vacancy rate of 3.3 percent in the first quarter. Although that was higher than the vacancy rate in the fourth quarter of 1994 1.1 percent it was lower than the industrial vacancy rate of 4.6 percent for the first quarter of 1997.

"If you look at Santa Clarita Valley as a whole at 3.3 percent, that's very low," said Jim Linn, vice president in Grubb & Ellis' industrial services group. "Traditionally, not just in this market, but in industrial markets nationwide, 5 percent to 10 percent vacancy is a healthy vacancy rate."

In Lancaster, the Rite Aid distribution center, which broke ground in February, will be the largest building in the Antelope Valley at 1 million square feet, Gilley said. The center which will be used to service Rite Aid stores throughout the Los Angeles area is expected to be completed early next year, and later may be expanded to 1.5 million square feet.

Also in Lancaster, Federal Express Corp. moved in January into a new 34,000-square-foot distribution center. Another distribution center for Michaels Stores, a chain of arts-and-crafts supply stores, also began construction in the first quarter. The 432,000-square-foot center is slated for completion in June.

"We really are becoming the distribution alternative to the Inland Empire," Gilley said. "And we're dealing with a number of big distribution folks right now as well. We're showing there is an alternative."

In Lancaster's retail market, ground was broken on a 110,000-square-foot Home Depot home improvement store, and Chief Auto Parts opened a 5,000-square-foot outlet.

In Palmdale, commercial and retail development also was minimal in the first quarter. The largest development was the breaking of ground on a 4,000-square-foot Western Dental Centers outlet.

The Santa Clarita Valley, however, had a much hotter quarter for retail real estate development. In the first quarter, ground was broken on 60,000 square feet of new retail space at Town Center Drive, a "Main Street"-style offshoot of Valencia's regional shopping mall, Valencia Town Center.

Space in the new addition which is set to open this November already has been leased to a variety of retail chains, including Ann Taylor, Nine West and Kids Footlocker. "Leasing is very strong," Lauffer said.

Newhall Land and Farming also broke ground on a 100,000-square-foot entertainment complex on Town Center Drive. The complex, slated to open in spring 1999, will have an 11-screen Edwards movie theater, an Imax movie theater and a Borders Books and Music store.

"It's mostly leased," Lauffer said. "We're in the final stages of lease negotiations on several tenants."

Also in the first quarter, Newhall Land and Farming announced the sale of the 72,000-square-foot Valencia Marketplace. In January, a "community center" phase of the shopping center including a Vons market, a Starbucks coffee shop and a Noah's New York Bagels shop opened.

The buyer of the shopping center, which was sold for $111 million, will not be disclosed until escrow closes later this year, Lauffer said.

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