It was status quo in the San Fernando Valley during the fourth quarter, with the vacancy rate for the region as a whole remaining at 14.8 percent, unchanged from the third quarter. Overall, the commercial office market in the Valley was treading water, giving back just 5,000 square feet in the last quarter of the year, according to data provided by Jones Lang LaSalle Inc.
For the full year, however, the market experienced strong absorption of more than 730,000 square feet. The leader in the region was the West Valley, where more than 500,000 square feet was taken off the market during the year, capped off with close to 33,000 square feet of net absorption in the fourth quarter. At the same time, average asking rents declined to $2.31 per square foot in the fourth quarter in the West Valley from $2.36 in the prior period. The year-end number in the West Valley was still well above the year-earlier period, when the rate was $2.13.
The up-and-down pattern has been characteristic of the last few years, as the market has struggled to recover from recession.
“We’re in an interesting market at the moment, with good numbers one quarter and bad the next, then a couple good quarters and more bad. We’re bouncing around on the bottom of the market,” said Dan Sanchez, executive vice president at Jones Lang LaSalle. “We’d like to see 250,000 square feet or more absorbed per quarter to show that a real recovery is under way.”
The tightest area continues to be the Central Valley submarket, where the vacancy rate declined slightly to 11.1 percent in fourth quarter, down one-tenth of a point from the third quarter. Nearly 140,000 square feet came off the submarket in 2013. Rents dropped 4 cents to $2.42 in the fourth quarter, compared with $2.46 in third quarter, but many landlords there are making concessions a thing of the past, Sanchez said.
“We are seeing some of the landlords increasing rental rates 4 percent a year instead of 3 percent,” he said. “Things like free parking and free rent are being diminished or not offered at all because there are very few large blocks of space available.”
Stacy Vierheilig-Fraser, senior managing director at Charles Dunn Co. Inc., said her office was busy during the fourth quarter.
“A lot of people are looking to buy and there’s not a lot of product out there,” she said. “With interest rates going up and cap rates going down, people are looking for good product on the market and the prices they are willing to pay are going up. But there’s lots of competition.”
The East Valley gave back almost 23,000 square feet in the fourth quarter and its vacancy rate climbed to 21.2 percent from 20.4 percent in the third. Rental rates, already the highest in the region, continued to climb, rising a nickel from the third quarter to close the year at $3.06.
– Karen E. Klein
The Easton Building, 7855 Haskell Ave. in Van Nuys, sold for $12.3 million, or $155.75 per square foot. The buyer was VNSH LLC. The 79,000-square-foot Class B office building was built in 1986 for Easton Sports, which has leased the site through 2016 at an estimated annual rate of $31.80 a square foot.
The Mission Industrial Park, a collection of 21 buildings totaling more than 173,000 square feet, was traded for $19 million, or about $109 per square foot, under a 1031 property exchange. Buyer Francis S. Maas of Beverly Hills purchased the property from GS Properties Inc. of Sun Valley and Chicago-based Beverly Area Local Development Co.
Viking River Cruises renewed its lease for nearly 69,000 square feet at 5700 Canoga Ave. in Woodland Hills. The estimated lease rate was $2.65 per square foot a month.
Prudential California Realty extended a lease on a real estate office at 13300 Ventura Blvd. in Sherman Oaks. The company has leased the 5,500-square-foot space since 2011 and has extended to 2016.
Doctors Medical Plaza, at 10515 Balboa Blvd. in Granada Hills, was sold to SimulTrans, a Northern California-based software translation company. The 43,000-square-foot office building was acquired for $9 million, or $210.66 per square foot, by Jamison Services Inc. of Los Angeles.
San Fernando Valley
Office Market At a Glance
Inventory 38 million square feet
Under Construction 0
Class A Asking Rents $2.41
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