The Santa Clarita Valley collectively held its breath in the second quarter after the bankruptcy filing of LandSource Communities Development LLC, parent company of Newhall Land & Farming Co.
The question among commercial real estate brokers was how much of an impact the filing of the valley’s largest residential developer would have on commercial and industrial leasing at a time when economic growth has slowed.
And at a time when the company, the developer of Valencia, was getting closer to breaking ground on Newhall Ranch, the planned 21,000-home community west of the Golden State (5) Freeway. “The impact on the commercial market is not yet clear,” said David Solomon, senior vice president with CB Richard Ellis Group Inc.
LandSource filed for bankruptcy after defaulting on a $1.1 billion loan in April when the crumbling housing market prevented it from selling property to meet its obligations. LandSource is a joint venture majority owned by an investment arm of the California Public Employees’ Retirement System.
And even without the Newhall Land announcement, Valencia’s second quarter office vacancies were looking dodgy. The vacancy rate spiked 6 points since the first quarter to 22.2 percent, and net absorption hit a negative 4,465 square feet, according to Grubb & Ellis Co.
The situation wasn’t helped when Summit Oaks, a 144,000-square-foot office project by Aliso Viejo-based Parker Properties, came on line without any preleasing. With more space set to come on line, Valencia office vacancies could hit 30 percent.
Office Market At a Glance
Inventory: 2.64 million square feet
Under Construction: 199,000 square feet
Class A Asking Rents: $2.87
MAIN EVENTS
– The future of the region’s longest standing developer, Newhall Land & Farming Co., was placed in doubt when parent firm LandSource Communities Development LLC filed for bankruptcy in early June. LandSource is a joint venture of Lennar Corp, LNR Property Corp. and an investment arm of CalPERS. Newhall Land expects development work to continue on the 19-square-mile Newhall Ranch, which will add more than 21,000 homes to Santa Clarita.
– Area developer Intertex Cos. completed construction on a new mixed-use development, Bridgeport Marketplace, at the northeast corner of Newhall Ranch Road and McBean Parkway. Prospective retail tenants include California Pizza Kitchen and Walgreens. More than 30,000 square feet has been set aside for office use at the site, which includes a manmade lake and milelong walking trail.
– Vacation tour specialists American Ring Travel Inc. leased 4,000 square feet at Summit at Valencia, 27240 Turnberry Lane. The firm was already in the space via a sublease from Country Home Loans. Subsequently, American Ring negotiated a direct lease with the building’s owner, Great Point Investors LLC. Terms were set for three years in the mid-$2 range, full-service gross.
– Bridgeport Marketplace, a 170,000-square-foot center that mixes upscale retail and office, opened its doors with 30 percent of space set aside for office use. Asking rents cap out at $3.50 per foot.
