The industrial sector continued to drive the Santa Clarita Valley real estate market during the first quarter, while the Antelope Valley showed signs of robust commercial growth.
“Activity was very strong in the first quarter,” noted Craig Peters, senior vice president with CB Richard Ellis Inc., referring to the Santa Clarita Valley.
The first-quarter vacancy rate for Santa Clarita Valley industrial space was a scant 3.8 percent, while net absorption was 321,032 square feet, according to Grubb & Ellis. Peters expects the market to remain strong amid a softening economic market.
“Firms are cautious, but proceeding,” he said.
Kimball Microelectronics Group led the procession with its purchase of a 40,000-square-foot building in the Valencia Commerce Center from local developer Intertex Holding Co. for $5 million. Other developments in the Valencia Commerce Center included Panattoni Development Co.’s purchase of 4.47 acres for the development of a 101,255-square-foot manufacturing and distribution building due for completion this October. Additionally, IIC Financial & Development bought 4.74 acres in the Valencia Industrial Center’s Highridge Business Park for the development of 55,829 square feet of space in 12 buildings, a project that is expected to be finished in the third quarter.
Jim Linn, senior vice president with Grubb & Ellis, noted that the area’s steady population growth, as evidenced by the 1990-2000 census growth figure of 36.6 percent for Santa Clarita, is counteracting any effects of an economic downturn.
“As the labor pool increases, you’ll find more companies from the San Fernando Valley migrating here,” said Linn, citing both workforce abundance and diversity as major draws.
While the economy and the statewide energy situation concern many, “tenants are moving forward with local expansion plans and are not seriously considering relocating out of the area,” he said.
In fact, according to Peters, 54 percent of industrial space growth has been due to local expansion, with the remaining 46 percent from migration of companies into the area.
“You’ve got entertainment, aerospace and the biomed cluster, which will show the most dynamic growth in the next few years,” Peters said.
Meanwhile, the Santa Clarita Valley office market chipped away at large inventories, as vacancy rates dropped 1.5 percent from the fourth quarter to 28.3 percent, according to Grubb & Ellis.
While not as active as the Santa Clarita Valley, the Antelope Valley, buoyed by its surging residential population base and a business-friendly environment, has been enjoying some commercial growth.
“We’re starting to see a lot of buildings that have been sold,” said Grubb & Ellis senior associate Chris Jackson, who mentioned that SKN Industrial is developing 41,905 square feet of space in three buildings that is expected to be completed this quarter. “There’s a lot of space in larger projects (with over 60,000 square feet of space) coming on line,” Jackson said.
There has also been a fair amount of business migration from East San Fernando Valley communities such as Pacoima to the Antelope Valley, Jackson said.
He cited incentives that Palmdale offers including generous tenant improvements, lower loan rates, and enterprise and foreign trade zones as factors contributing to the growth. One company drawn to the area is Sun Valley-based U.S. Architectural Lighting, which purchased 11 acres in Palmdale’s Fairway Business Park. According to Danny Roberts, Palmdale director of economic development, the land, on which 190,000 square feet of office space is to be built, was bought for $1.
“We need to keep pace with the provision of local jobs,” said Roberts, referring to Palmdale’s 70 percent population growth in the past decade, according to census figures.
