Santa Clarita’s office and industrial markets came to a quiet close in 2013, but brokers expect this year to be more lively.
“From the end of the third quarter to the end of the fourth, there just wasn’t anything significant,” said Ryan House, a vice president with Jones Lang LaSalle Inc. “Asking rates haven’t really changed much and there were no major lease transactions. That’s what happens in smaller markets.”
The only office transaction of note was the sale of the Class B Bank of America building at 23929 Valencia Blvd. in Valencia, which traded for $9.7 million, or $230.95 per square foot.
Average asking rates for Class A office properties rose a penny to $2.37 a square foot per month from $2.36 in the third quarter, according to research by Jones Lang LaSalle. That’s still down from the $2.40 charted in the final quarter of 2012. Vacancy ticked slightly lower to 16.3 percent in the fourth quarter, from 16.6 percent in the third and 16.4 percent one year ago.
“Vacancy at 16 percent is still 10 percent better than three years ago,” House said.
Most available inventory is suitable for professional services and small businesses requiring limited square footage.
“For the 15,000 square foot or more user, there may be two options: 27200 Tourney Road and the Summit at Valencia,” House said. That might push rents up for those big blocks; asking rates for smaller floor plates will likely remain steady.
The market’s relative proximity to studio headquarters on the Westside and in the Tri-Cities make it an attractive outpost for production offices. And the growing residential market keeps professional service firms interested in having a presence there.
“We’re beginning to see various developers who’ve got proposed buildings starting to sharpen their pencils again on construction costs and actively marketing build-to-suit properties,” House said.
On the industrial side, continued absorption kept the vacancy rate in the North L.A. submarket, which includes the Santa Clarita Valley, at 5.5 percent, where it hovered all year. Asking rates were 58 cents a square foot, again relatively unchanged on the year.
As on the office side, there are few large blocks of space available for industrial users.
“Strong demand is pushing prices to the level that justifies new development,” said Craig Peters, executive vice president of CBRE Group Inc.
That’s good news for three major industrial developments: the 42-acre LNR Commerce Center, the 70-acre Sterling Gateway and the 160-acre Needham Ranch project. Only LNR Commerce Center is expected to be on line in 2014.
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