In March 2015, BAM Luxury Development Group leased 17,010 square feet at 7100 Fair Ave. in North Hollywood at an estimated monthly rent of 74 cents a square foot. The property was acquired by Global Logistic Properties Ltd. in February as part of an $8.1 billion portfolio sale.
A 1.5-acre Class B industrial-warehouse property at 12300 Branford St. in Sun Valley sold in January for $2 million. The 21,550-square-foot multitenant property was fully leased at the time of sale.
In a lease transaction netting approximately 68 cents a square foot, 12400-18 Gladstone Ave. in Sylmar will be occupied by Fantasy Cookie. The company, a family owned bakery, leased the 40,305-square-foot industrial space in February.
Redbox leased 16,085 square feet in Building E at 21215 Burbank Blvd. in Woodland Hills’ Warner Center. Monthly asking rents in the building are $2.75 a square foot.
The first quarter was a watershed for the San Fernando Valley’s commercial submarket. For the eighth consecutive quarter, vacancies either declined or remained steady in the Valley’s office sector.
The data, provided by Jones Lang LaSalle Inc., show the market has returned to prerecession activity levels and is nothing short of spectacular, said Briana Krank, an associate at Avison Young.
“The market is either at, or surpassing, where it was in 2007,” she said. “The economy is getting back to a healthy place again. Companies are becoming more confident, signing longer lease terms and taking more space.”
With an overall vacancy rate of 13.5 percent, just shy of last quarter’s 13.4 percent and down from 14.1 percent in the year-earlier period, the Valley’s office submarket continued to gain strength and, in some cases, chafe against restrictions resulting from few new construction projects.
Conejo Valley was a bright spot in the Valley’s new construction numbers. More than 160,000 square feet are under construction at Westlake Park Place, an eight-building campus on a 27-acre site that will add nearly a half-million square feet of Class A office space when completed.
That area also boasts rents and the high end of the submarket average, $2.50 a square foot, well above the full San Fernando Valley market average of $2.43 a square foot.
The office submarket continues to gain momentum despite experiencing a negative net absorption for the first time in several quarters. At more than 40,000 square feet in the red, the reversal is far below the 545,000 positive net absorption recorded in the final quarter of 2014.
A duo of transactions in the central Valley and Woodland Hills are responsible for the change. Prospect Mortgage renewed its lease at Sherman Oaks Galleria for 35,000 fewer square feet than it previously occupied, and Universal Music Group rearranged itself within Warner Center.
“It just comes out to timing,” said Ryan House, a JLL vice president. “It doesn’t indicate a declining market. I anticipate the trend of positive absorption to reoccur, which just means further tightening.”
And, when it comes to sales in the office sector, the Valley “has been hot, hot, hot,” said Stacy Vierheilig-Fraser, senior managing director with Charles Dunn Co. Inc. “Everything I’m calling on, they say, ‘We’ve got offers, we’ve got escrow,’ and all the inventory I have is under contract. There’s not a lot of product for sale right now.”
– Laurie L. Dove
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Lease Activity Looking Up as Acquisition Properties Drying Up
- REAL ESTATE QUARTERLY: Available Space Continues to Dwindle With Projects in Pipeline
- REAL ESTATE QUARTERLY: Central Valley Paces Field as Vacancy Tightens Across Submarket
- Hefty Lease Deal Has Brokers Bullish on ‘Other Valley’s’ Prospects
- Real Estate Quarterly: Interest Builds in More Construction With Steady Demand for Space
- Real Estate Quarterly: Lease, Sales Deals Increase: Vacancies Down Across All Submarkets
- Greater Absorption Balanced by Consistent Vacancy Rate
- REAL ESTATE QUARTERLY: Companies Sign Up for Long Term as Industrial Rents Head Up