Redevelopment of the former General Motors Corp. assembly plant already has begun to revitalize a broadening area of Van Nuys and Panorama City.
"The Plant," a 68-acre retail/industrial redevelopment project under construction along a once desolate stretch of Van Nuys Boulevard, is drawing investors, developers, and office and industrial tenants to an area stretching from Victory to Roscoe boulevards.
"With what's going on with the GM site, the area is really cleaning up immensely," said Danny Michael Miller, a principal with real estate brokerage Lee & Associates. "There's going to be a resurgence."
A resurgence is already underway, even though the Plant's retail component is not scheduled to open until this fall and its first industrial building won't be complete until December or January. Consider, for example:
? A developer is negotiating to acquire an 11-acre site across the street from the Plant from Public Storage Inc., which bought the property last October.
? Developers are in talks with Union Pacific Railroad Co. to acquire almost nine acres of railroad land adjacent to the Plant.
? Plaza Investments, a private developer, has just completed a renovation of its 44,000-square-foot shopping center at Sherman Way and Van Nuys Boulevard.
? The Financial Center, a six-story office building at Victory and Van Nuys boulevards, is undergoing a top-to-bottom renovation by its new owner.
"Panorama City was dead until the combination of Wal-Mart and that GM development," said Richard Leyner, a vice president with Capital Commercial Real Estate, referring to Wal-Mart opening its first L.A.-area store at the nearby Panorama Mall in May.
The Plant, which is being developed by the Selleck Development Group and the Voit Cos., is projected to add 3,000 new jobs to the area and will attract tens of thousands of consumers to its stores and movie theaters. In addition, about five acres of the former GM site will be devoted to a police and fire services center that is expected to help dispel lingering concerns about crime in the area.
"Within the last year and a half or two years, there's been a lot of interest in the area," said A. Randall Steinberg, business development representative on L.A.'s Business Team at Mayor Richard Riordan's office. "The retail will be able to service these companies. In addition, as a result of the industrial development at GM, it's becoming an up-and-coming industrial area."
Voit, which has been developing the Plant's 600,000-square-foot industrial park, also is close to a deal to acquire an adjacent, 6.7-acre site on Saticoy Avenue, said Don Caldwell, senior sale manager for the Union Pacific Railroad Co., which owns the parcel. Caldwell said he is in talks to sell an additional two acres of railroad land to other buyers in the area.
"With the Voit project there, it's definitely a shot in the arm," said Caldwell "There's been a lot of interest."
Public Storage, which acquired an 11-acre site last October, originally intended to use the land for one of its storage facilities. But the company has been getting other offers. "There's a lot of interest, and it may make more sense for us to sell it than use it for our own use," said Carl Phelps, a senior vice president with the Glendale-based company.
Does Public Storage stand to make a lot of money on the sale? "Let's put it this way," Phelps said. "I think our timing was good, and we're hopeful of selling it for modestly more than we acquired it for."
Industrial vacancy rates in the San Fernando Valley area, low for some time because of the lack of space throughout the area, fell to 3.6 percent in the second quarter, from 3.9 percent a year earlier, according to Cushman & Wakefield Inc.
The industrial vacancy rate in Van Nuys is even lower, at 3.2 percent. But Panorama City's is relatively high, at 10.2 percent. Year-earlier comparative figures for those areas are unavailable because Cushman & Wakefield added several new buildings to its survey population since then.
Meanwhile, Panorama City office vacancies, though still high compared with the overall Valley rate of 13.4 percent, fell to 38.1 percent for the second quarter from 51.4 percent a year earlier. For the same period, the office vacancy rate in Van Nuys was 17.6 percent from 21.2 percent a year earlier.
Brokers attributed the improvements to landlords who have made building renovations. "The office market was so depressed that you would not see anybody spending money on renovations," said Duane Cody, associate director for Cushman & Wakefield. "But now people can recoup their costs."
In the years following the Northridge earthquake, speculators acquired a number of office buildings and retail centers in Van Nuys and Panorama City at extremely low prices, ranging from $10 to $20 a square foot. That compares with $50 to $70 a square foot for similar buildings in other parts of the Valley, brokers said.
Speculators let those damaged buildings sit empty until the market upturn made renovations economically feasible.
Along with the higher rents, up from as low as 80 cents a square foot per month, office buildings around the Plant are attracting higher-caliber tenants, brokers said. Instead of mom-and-pop tenants that typically require spaces of less than 1,000 square feet, prospective tenants are seeking 3,000 to 10,000 square feet, Cody said. "I had one tenant looking for 20,000 square feet," he said.
Unlike the previous tenants looking for little more than a roof and a cheap lease, the newer ones need space suitable for visiting customers, and some tenants have specialized design requirements. "They're willing to pay a little more to be in a nicer environment," Cody said.
A similar transformation is taking place in the retail sector, which is attracting new tenants lured by the promise of a ready market made by Wal-Mart and the Plant.
"I think it (the Plant) has had a wonderful effect in the attitude that the tenants of our shopping center have," said Frank Nazarian of Encino Management Group, property manager for the 30-store center. "The restaurants are going to be doing good business, and I think, overall, it's going to be a better environment."
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