SANTA CLARITA VALLEY: Brokers See Little Chance for Backslide as Vacancies Dip Once Again

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For a second consecutive quarter, the Santa Clarita Valley vacancy rate decreased – perhaps a sign the office market has finally turned the corner?

Well … that might be too optimistic a take, said local brokers, who noted the valley still has the fourth-highest vacancy rate in Los Angeles County at 23.9 percent, according to Grubb & Ellis Co.

They just don’t expect the market to regress.

“I don’t anticipate the vacancy rate going much higher than where it is today – as long as the major employers here in Santa Clarita keep the same amount of space they have,” said Ryan House, vice president at Jones Lang LaSalle.

For now, though, industry veterans will take what they can get, and that included a six-tenths of a point drop in the vacancy rate from the third quarter as 17,271 square feet of space was absorbed in the last three months of the year. Another positive sign: Landlords were able to raise asking rents a nickel to $2.60.

Brokers said the reason for this is that the mass exodus of home builders such as KB Homes and Centex, who set up shop in the valley during the last decade’s boom, has finally ceased. That means there is little new inventory in the roughly 2.76 million-square-foot market, aside from Santa Clarita’s Santa Clarita Professional Center, a single 99,000-square-foot multitenant office building that is not expected to be completed for at least six months.

Kevin Fenenbock, a senior vice president at Colliers International, noted that so far positive trends have been driven by the stability of smaller tenants, averaging 1,500 square feet.

However, in order for the office market to truly recover, larger companies need to fill the 30,000 square feet space that was occupied and later vacated by big residential and mortgage companies.

In the past, that has typically been done by companies who move north to Santa Clarita as the San Fernando Valley office markets heats up, driving lease rates higher.

Fenenbock noted that the local biotech and entertainment industries are growing – but not fast enough to turn the market around.

“For this market truly to have a big dip in vacancy, we have to attract larger entities,” he said. “That’s the key.”

MAIN EVENTS

  • Wal-Mart will open administrative offices in about 10,000 square feet of space at 28494 Westinghouse Place in Valencia. The space was formerly occupied by six tenants that relocated or closed. The landlord is San Juan Capistrano-based Birtcher Anderson Realty LLC. A price on the five-year lease was not disclosed.
  • TCast Communications, a provider of broadband, VoIP and voice services, leased 4,536 square feet at 25115 Avenue Stanford in Valencia for 75 months. The company has its customer service employees in Valencia. The landlord is the Koll Co., a Newport Beach office, industrial and resort owner, developer and manager. Price was not disclosed.
  • Chicago Title Insurance Co., a real estate services firm, leased 3,226 square feet at 26415 Carl Boyer Drive at Centre Pointe Plaza in Valencia. Spirit Properties Ltd. built the 40,991-square-foot building in 2007. Rent per square foot is estimated at $2.65, according to CoStar Group.
  • Comfort Keepers, an in-home care provider based in Dayton, Ohio, bought a 2,800-square-foot medical building at 23900 Lyons Ave. in Santa Clarita for $685,000 from local investors, according to CoStar Group.
  • The county’s Department of Children and Family Services expanded by 3,500 square feet to occupy a total of 45,000 square feet at 28470 Avenue Stanford.

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