Office vacancies in the Santa Clarita Valley nearly doubled to 15.2 percent compared with the same quarter last year, and third quarter leasing lagged.
But with tenants still absorbing large blocks of space, landlords didn’t seem to break a sweat. In fact, Valencia Class A asking rents jumped almost 20 cents to $2.94 per foot despite a bust in the housing market expected to crimp new subdivision construction in the valley.
“While (the mortgage crisis) was dramatic, it’s not anything like the dot-com bust of 2000, where the attitude was do whatever it takes to bring in tenants,” observed David Solomon, First Vice-President for CB Richard Ellis Group Inc. “Owners of newer, large buildings are mainly institutional. They have a (rental) number in mind when they get into the market, and can afford to show patience.”
Patience might become a new sport in Santa Clarita, given that nearly 300,000 square feet of new office product is set to unroll next year. Couple that with US Borax completing the exodus from their 130,000-square-foot Valencia headquarters and vacancy rates will likely get worse before they get better.
Still, the Santa Clarita market seems to abhor a vacuum: Fieldstone Homes, had no problem sub-leasing its space. And KB Home subleased 6,000 of its roughly 36,000 square feet in Santa Clarita and announced another 10,000 square feet up for sublease. Irvine land buyer SunCal Cos. chose to set up its own home building division as builders scaled back. It subleased 10,000 square feet left vacant by Pulte Homes.
MAIN EVENTS
– Global investment kingpin Invesco, which manages more than $500 billion in worldwide assets, finalized its purchase of the Town Center in Valencia. The 400,000 square foot mixed-use site at 24300, 24303, and 24305 Town Center Drive, and 24200 Magic Mountain Parkway, is the home base of Santa Clarita’s largest office tenant, Princess Cruises. The company occupies close to 300,000 square feet in three of the four buildings. Seller Thomas Properties sold the parcels for approximately $400 per foot, or just north of $160 million.
– San Francisco-based, McMorgan & Co., which manages more than $1 billion in mostly pension fund real estate investments, sold Summit at Valencia, located at 27202, 27220, and 27240 W. Turnberry Lane for $47.7 million, or about $170 per square foot. The buyer was Boston-based Great Point Investors LLC, which handles more than $800 million in office and industrial properties for institutional buyers.
– LNR Property Corp. will redevelop the 50-year old headquarters of Newhall Land, at 23823 Valencia Blvd., once Newhall Land relocates to LNR Entrada Gateway Center. Newhall Land’s current home is a 50,000-square-foot site with a large atrium and footprint. LNR Entrada is a pair of four-story, steel-frame Class A office buildings, totaling 200,000 square feet at Magic Mountain Parkway and the Old Road. It is targeted for completion in May.
– Law firm Mehta & Mann renewed for 3,260 square feet at the Commons at Valencia Gateway. Terms were set at 84 months with a start rate at just under $3 per foot.
David Geffner
