The Santa Clarita office market finished 2008 with the second-highest vacancy rate in L.A. County, 24.1 percent, up nearly two percentage points from the previous quarter.
Annual net absorption, which had been clicking along at 175,000 square feet for most of the last decade, closed out in the red, at 59,613 square feet, according to Grubb & Ellis Co.
"Santa Clarita is suffering because it's always thrived from out-migration from the San Fernando Valley and beyond, and that migration has come to a halt," noted Jim Lindvall, managing director with Jones Lang LaSalle Americas.
The Valencia-based broker has been trying to lease the former headquarters of US Borax Inc. at 26877 Tourney Road in Valencia. But there've been no takers for the 130,000-square-foot parcel.
Despite, the down numbers, landlords weren't breaking a heavy sweat yet. Class A rents in the submarket finished the year at $2.80, just 11 cents less than the same period in 2007. "The huge increase in vacancies is a function of the product delivery side," Lindvall said. "The big corporate anchor tenants in the valley, like MannKind Corp. and Princess Cruises, aren't going anywhere."
Point well taken. New Valencia construction 105,139 square feet in the pipeline and 144,000 having just come on line at the still vacant Summit Oaks has oversaturated the region's office base of just 2.6 million square feet.
Sales and leasing were weak in the usually robust industrial sector as well. Vacancies finished up at 5.2 percent, and annual sales and lease activity was just 1.43 million square feet.
Office Market At a Glance
Inventory: 2.7 million square feet
Under Construction: 105,139 square feet
Class A Asking Rents: $2.80
- Bel Air Lighting renewed its 189,250-square-foot lease at 28104 W. Witherspoon Parkway for 59 cents per square foot per month. The lighting manufacturer also subleased 109,970 square feet at 28355 W. Witherspoon Parkway for 50 cents per square foot.
- Precision aerospace parts maker True Positions Technologies Inc. bought a 43,500-square-foot state-of-the-art manufacturing facility at 24900 Avenue Stanford for $117 per square foot from American Honda Motor Corp in the fourth quarter's largest industrial sale.
- Galaxy Die and Engineering Inc. purchased a 28,913-square-foot industrial site at 24910 Avenue Tibbitts for $117 per square foot.
- One of LNR Entrada Gateway Center's two four-story Class A office buildings, at the northwest corner of Magic Mountain Parkway and the Old Road, will come on line in the first quarter of 2009. Despite attempts at preleasing, the 100,00-square-foot building will debut with no tenants.
- A December fire-sale auction for the real estate assets held by LandSource Communities Development, the parent of Valencia's Newhall Land & Farming, Co., had few takers, further throwing the future of one of L.A. County's largest proposed residential developments into question. The massive 21,000-unit Newhall Ranch housing project was set to break ground in the first quarter of 2009. That was before LandSource, a joint venture majority owned by Calpers, filed for Chapter 11 in June 2008 rather than default on a $900 million syndicated mortgage loan to lead lender Barclays Bank.
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