Large Amgen Deal Has Broad Impact on Lease Market
By DAVID GREENBERG
The Ventura County office market continued toward recovery during the third quarter as brokers secured several significant sales and leasing deals.
Third quarter office vacancy rates fell to 8.7 percent from 10.7 percent in the previous three months and 14.1 percent for the third quarter of 2002 as the damage from the tech bust has finally trailed off, according to CB Richard Ellis Inc.
In July, Thousand Oaks-based biotechnology giant Amgen Inc. paid in the mid-$20 million range to sublease 200,000 square feet of office space from Intel Corp. for eight years in the Conjeo Spectrum complex in Thousand Oaks.
“It absolutely is the largest office lease to go down in the market in years,” said Tony Principe, executive vice president of Westcord Commercial Real Estate Services, which represented Intel. “When we got rid of the large space on the market, it had a positive ripple effect around in the market.”
The buildings will likely house the major operations of Immunex, a manufacturer of leukemia and rheumatoid arthritis drugs that Amgen purchased in 2001.
In other activity, Malibu Research Associates Inc. signed a five-year lease on 26,932 square feet for $1.3 million at 3760 Calle Tecate in Camarillo in July.
During the quarter, new tenants in Ventura County took up 369,376 more square feet than was vacated. Brokers said little new space came on the market in the past year.
“With developers having taken a more conservative approach to new development, we’ve been able to absorb most of the new space coming into the market and retain existing tenants,” said Chuck Engel, first vice president at CB Richard Ellis.
Buildings on tap
Thousand Oaks-based Silagi Development and Management won’t complete construction of its five-building office complex at Camarillo Springs Office Park until December. Yet six of the 12 units, totaling 72,640 square feet, have already been sold.
“I have $50 million to invest and I cannot find any properties to buy,” said Moshe Silagi, owner of the Thousand Oaks-based firm. “That’s why I’m building (locally) and going out to Arizona, Nevada, Colorado and Utah.”
Demand was so high for the Silagi development that he raised his price to $210 per square foot from $190. Silagi said that even though vacancy rates were high when he broke ground on the project in January, he was not concerned about building on spec because Ventura County added 3 percent to its job base in 2002.
“Statistics and reality don’t always go hand in hand,” Silagi said. “I didn’t think it was that bad to start with in Southern California.”
Leasing rates remained stable at $1.60 per square foot in Ventura and $2.50 per square foot in the Westlake Village area. That makes Ventura County a more attractive alternative to much of L.A. County, where rates were as high as $3.14 in areas such as Santa Monica.
“Occupancy has been the top priority for existing landlords and raising the rates could make that more difficult,” said Engel.
But with the improvement in the economy, concessions that landlords have been offering for two years one or more months of free rent, tenant improvement allowances and cash bonuses for brokers and tenants are being taken off the table, brokers said.
The office market still has its share of investors who bought buildings on spec in order to lease them later on or small business owners who are taking advantage of low interest rates. “The demand for small buildings for sale is so strong,” said Mike Foxworthy, executive vice president of Daum Commercial Real Estate Services.
The industrial vacancy rate in Ventura County increased to 9.9 percent in the third quarter from 8.4 percent in the previous three months, but developers said they see an increase in demand.
Silver Strand Equity Ltd., under the direction of Camarillo developer Martin Teitelbaum, broke ground in July on a $10 million Silver Strand Business Center at the corner of Rose Avenue and Westar Drive in Oxnard.
Plans call for 14 industrial buildings ranging from 5,100-10,000 square feet each, with the project totaling 95,617 square feet.
Already, 11 buildings are either sold or leased several in the third quarter to service industry companies and warehouse, distribution and manufacturing operations. The project is slated to be complete by the end of the year.
“There were no leases or sales signed up prior to breaking ground,” said Michael Walsh, executive vice president at Daum, the project’s marketing agent. “Ventura County has weathered the recession better then the rest of Southern California.”
In August, Atlas Fence Co. paid $3.3 million to Astrocosmos Metallurgical for 46,056 square feet of industrial space in two buildings in the Flynn Road Industrial Park at 835 and 847 Flynn Road in Camarillo.
Astrocosmos is finally moving out of its former complex after leasing 70,000-square-foot of space in Oxnard in May 2002.
-Amgen Inc. signed an 8-year lease in the mid-$20 million range for 200,000 square feet of office space in the Conjeo Spectrum complex in Thousand Oaks.
-Atlas Fence Co. bought two buildings totaling 46,056 of industrial space at the Flynn Road Industrial Park in Camarillo for $3.3 million.
-Malibu Research Associates Inc. paid $1.3 million for a five-year lease on 26,932 square feet of space at 3760 Calle Tecate in Camarillo.
-Silver Strand Equity Ltd broke ground in July on a $10 million Silver Strand Business Center at the corner of Rose Avenue and Westar Drive in Oxnard.