Office Market At a Glance
Inventory: 2.76 million square feet
Under Construction: 99,000 square feet
Class A Asking Rents: $2.64
A combination of new buildings and several vacancies left the Santa Clarita Valley office market struggling in the first quarter with a 25.9 percent vacancy rate, up two-and-a-half points since the end of the year.
The biggest hits to the region were two vacancies at 28460 Avenue Stanford that freed up more than 26,000 square feet. For a small market like the valley, these vacancies made a big impact on rates this quarter.
Also driving up vacancies was the opening of the Summit Pointe in the Center Pointe Business Park, with six buildings and more than 31,000 square feet of office space.
Despite these factors, the vacancy rate is only six-tenths of a point above last year’s first quarter rate. A couple of big deals could drive down vacancies significantly, but broker Ryan House doubts the region will see improvements soon.
“I don’t see this space being repopulated for nine to 12 months,” said House, vice president at Jones Lang LaSalle. “I don’t see much happening in the market to sway the vacancy rate one way or another.”
The market has seen a few deals, among them health maintenance organization Kaiser Permanente renewing its lease on an 11,000-square-foot office space in Valencia.
“At least we had a tenant renew in the market and not downsize,” House said, alluding to last quarter’s most common trend.
Class A asking rents decreased three cents to $2.64, reflecting the desire of landlords to lease up vacant space.
In the industrial market, despite signs of a pickup in activity at the end of the year, the vacancy rate continued to rise in the first quarter. It was up to 3.7 percent, two-tenths of a point higher than the fourth quarter. Asking rents, however, remained a stable 56 cents.
- Kaiser Permanente renewed its lease of an 11,000-square-foot building in the Valencia Executive Plaza. The health maintenance organization worked out a deal to rent the space at 27201 Tourney Road for a similar asking rent as its previous lease but with increased services. Terms of the deal were not disclosed.
- California’s Contractors State License Board leased 3,500 square feet of office space at 28480 Avenue Stanford. Landlord American Assets rented the space for $2.65 per square foot with annual increases. Though the lease was small, the state was one of a few new tenants to the Santa Clarita market this quarter.
- Aircraft parts supplier Kapco signed a lease for 26,000 square feet of office space at the newly opened Summit Pointe in the Center Pointe Business Park. Kapco is paying $21.5 per square foot on a modified gross basis for the property at 26501 Summit Circle to landlord and developer CMD Real Estate. Kapco is headquartered in Brea.
- The Santa Clarita Water Co., which supplies the city of Santa Clarita and many unincorporated areas, bought two office buildings at Summit Pointe. CMD sought $2.25 per square foot for the buildings at 26511-26525 Summit Circle, but terms of the deal were not disclosed.
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