Valencia's office market continued to weaken in the quarter, with the vacancy rate hitting 25.3 percent, up from 24.1 percent at the end of last year. But with only about 110,000 square feet of new space left in the pipeline, brokers said the market may be near bottom.

Added evidence: The office market gave back 23,881 square feet of space, about half as much as was dumped back in the same quarter in 2008 as the region's home building market imploded.

"Valencia's office sector was more tied into the success of residential home sales than other L.A. County submarkets," said David Solomon, senior vice president at CB Richard Ellis Group Inc. "When things were going good, every mortgage, title and escrow company was up there. But when it all ground to a halt, most of that office space became redundant."

News that homebuilder Lennar Corp. may buy back all or portions of the Newhall Land and Farming Co. fueled confidence that Santa Clarita's massive residential development, Newhall Ranch, would eventually move forward. The Calpers-led joint venture that currently owns it, LandSource Communities Development LLC, is in Chapter 11.

Solomon said the steep drop in demand has convinced landlords that aggressive deal-making may be smarter than waiting around.

"The office owners up here are well capitalized, and few, if any, buildings are in jeopardy of going away," he added. "Once the home market returns, we'll see a lot more absorption."

Meanwhile, the region's industrial market has picked up a bit, even though North County saw its vacancy rate rise a half-point to 3.1 percent. Craig Peters, executive vice president with CB Richard Ellis Group, reported three pending deals totaling more than 375,000 square feet. Asking rates for Santa Clarita industrial product closed at 61 cents per foot, two cents lower than in the fourth quarter.

Office Market At a Glance

Inventory: 2.66 million square feet

Under Construction: 110,378 square feet

Class A Asking Rents: $2.75

MAIN EVENTS

- Florida homebuilder Lennar will buy back portions of bankrupt LandSource Communities Development LLC, the joint venture it once majority owned with LNR Property Corp. but is now majority owned by Calpers, the California Public Employees Retirement System. The bankrupt venture owns Newhall Land and Farming Co. as well as county's largest proposed home development, Newhall Ranch. Lennar's repurchase is expected to come at a vastly lower sum than the $1 billion Lennar-LNR paid in 2004.

- The 70-acre planned Valencia business park, Sterling Gateway, just north of Highway 126, received its entitlements from Los Angeles County. The project will add 1.3 million square feet to Santa Clarita's industrial base.

- Valencia-based builder JSB Development reported that Phase Two of the company's RiverCourt project is nearing completion in the Valencia Industrial Center. Phase One totaled 43,958 square feet of office product, while Phase Two totals 42,836 square feet of industrial space. Two of the 11 buildings in Phase Two are in escrow.

- NBC Studios inked 20,888 square feet of Class A industrial space, at 28210 Constellation Rd. in Valencia, for its hit TV show "Knight Rider." The short-term deal from landlords Brett and Bevra Bannerman was signed for an undisclosed rate and represents nearly one-quarter of the building's overall space.

- Hypercel Corp., a global wireless accessory distributor, leased 16,101 square feet of industrial space at 28010 Industry Drive in Valencia. The rate for the two-year deal with Industry Drive Associates LLC was not disclosed. Hypercel's U.S. headquarters is in Valencia.

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