SAN FERNANDO VALLEY: Drop in Asking Rents Helps Fuel Deals

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Major events in individual commercial and industrial real estate markets across the area in the fourth quarterly.

The San Fernando Valley may have gotten slammed in the fourth quarter, but it wasn’t nearly as bad as the last go-round.

All told, the submarket gave up almost 15,000 square feet, a far cry from the third quarter when it coughed up almost 200,000 square feet, according to Grubb & Ellis Co. In fact, the region’s fourth quarter performance was its best in 2009.

The reason for the stabilization: With the Class A asking rent so low – down three cents in the fourth quarter to $2.45 a square foot – tenants are sensing things have bottomed out and are willing to make deals. Rent could fall an additional 5 percent in areas with high volume such as Sherman Oaks, but after that things will likely stabilize, said Bob Pearson, executive director of Madison Partners in Century City.

Landlords, meanwhile, are willing to meet their demands to keep buildings from going vacant.

“What happened in the fourth quarter is landlords became realistic and really wanted to make deals, and so tenants realized that and were able to go ahead and execute,” Pearson said.

The Valley was buoyed in part by its eastern region, including entertainment industry-heavy North Hollywood and Universal City, which absorbed more than 37,000 square feet. At $2.98 a square foot, the eastern region’s asking rent is the highest in the Valley, and yet it also represents a significant discount from a year ago, when the rate was more than $3.50.

Given that, tenants could lock down favorable long-term deals: Pilgrim Films & Television Inc., for instance, signed a 65-month lease for more than 36,800 square feet at 12020 Chandler Blvd. in North Hollywood.

Office Market At a Glance

Inventory: 28.5 million square feet

Under Construction: 0

Class A Asking Rent: $2.45

MAIN EVENTS

  • Alchemy Communications Inc. signed a 36-month lease for 11,000 square feet at 20950 Warner Center Lane in Woodland Hills. The landlord was Equity Office. Consideration was not disclosed. Alchemy Communications is a data company that provides Internet connectivity service, Web video streaming and digital marketing. The company is headquartered in downtown Los Angeles.

  • Cohen & Associates LLC, a Brentwood-based real estate developer, bought Sonterra Homes, a 99-unit condo development, from Inland Bank of Oak Brook, Ill. The all-cash deal for the Van Nuys property was valued at $6.15 million, or roughly $62,121 per unit. The project at 15425 Sherman Way includes a swimming pool, spa, fitness center and other amenities. The development had been foreclosed in June 2009 by Inland Bank after the condo market cratered.

  • Adler Realty Investments Inc. signed a five-year lease for 6,000 square feet at 20951 Burbank Blvd. in Woodland Hills. The location will be the firm’s new corporate office in the area. The landlord was Equity Office. Consideration was not disclosed. Adler Realty Investments also has offices in Long Beach, Bakersfield and Phoenix.

  • Pilgrim Films & Television Inc. signed a 65-month lease for 36,877 square feet at 12020 Chandler Blvd. in North Hollywood The lease is valued at $5.5 million, and the landlord is Pacific Coast Capital Partners LLC. Pilgrim Films claims to be the largest producer of reality television shows in Los Angeles, and its slate includes “Ghost Hunters,” “American Chopper” and “The Ultimate Fighter.”

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