Statistics indicate the Valencia office market treaded water in the second quarter, absorbing some space as the vacancy rate stayed virtually flat. But those numbers did not account for Valencia’s largest office deal of the year: the lease-up of Summit Oaks, the market’s premier Class A property.
Advanced Bionics inked the entire five-story, 144,000-square-foot property, at 28515 Westinghouse Place, in a deal that has a history as complex as the medical device maker’s implant technology. Founded by billionaire inventor Alfred Mann in 1993, Advanced Bionics was sold to Boston Scientific in 2004, which ousted Mann when profitability lagged. Mann then filed a federal lawsuit and was able to buy back portions of Advanced Bionics but had to ditch the company’s current headquarters on Rye Canyon Loop by Sept. 30.
“The timetable was very challenging,” observed Craig Peters, executive vice president with CB Richard Ellis Group Inc., who represented Advanced Bionics.
The deal was not reflected in the numbers, since Advanced Bionics has not yet moved into the property. But given Santa Clarita’s shallow office base of just 2.66 million square feet, brokers said the new tenancy at Summit Oaks is a game-changer.
“We’re not likely to see any new space being built for a while,” said broker David Solomon, who represented Summit Oaks owners Parker Properties and RREEF Alternative Investments. “Having one single tenant reduce lease-up nearly 5% of the overall base is a stabilizing force.”
In fact, while Class A rental rates were off 9 cents from the same quarter last year, the $2.78-per-foot rate reported by Grubb & Ellis is an encouraging sign in a market hammered by the loss of home builders and related companies.
The news that Newhall Land and Farming Co. would be emerging from bankruptcy also engendered cautious optimism. Home builder Lennar Corp. will regain control of the company, which developed much of the valley.
Office Market At a Glance
Inventory: 2.66 million square feet
Under Construction: 199,000 square feet
Class A Asking Rents: $2.78
MAIN EVENTS
– Medical device maker Advanced Bionics leased up all 144,000 square feet at Summit Oaks, at 28515 Westinghouse Place, in Valencia in a deal that amounted to $3 per foot full service gross. The company will occupy the first 60,000 square feet Oct. 1
– Sources said the reorganization plan filed in bankruptcy court last quarter by Miami-based homebuilder Lennar Corp. in an effort to revive Newhall Land and Farming Co. parent Land Source Communities Development LLC has been endorsed by secured creditors. That paves the way for Newhall Land to emerge from bankruptcy as early as August.
– Pharmacy supplier Bocchi Labs signed on for 75,209 square feet of industrial space at 27801-27827 Avenue Scott in Valencia. The deal with landlord First Industrial Realty Trust Inc. netted roughly $600,000 in consideration.
– 25261 Avenue Tibbitts, a 15,526-square-foot industrial site in Valencia, was sold for $2.36 million, roughly $153 per foot, by Rivercourt LLC. Brokers said buyer Mirabella Beauty Products is an owner-user, typifying the trend of occupants cutting costs by shifting from leasing to now cheaper ownership.
– NBC Universal renewed its 14,085-square-foot commitment at 25619 Hercules St. in Valencia for an additional 12 months. Terms of the deal with owner 2525 Ocean Park Blvd. for the industrial space were not disclosed. Last quarter the TV network inked space at 28210 Constellation Road for hit TV show “Knight Rider.”
