The San Fernando Valley showed some incremental improvement in the quarter as tenants taking advantage of the still weak market signed leases that locked in low rents. Brokers said large businesses in particular are staying put, and when companies move, it’s usually not far or out of the Valley.
The deals took 42,500 square feet off the market, and the most recent quarter was the sixth out of the last eight in which the Valley has seen modest positive absorption. Still, the vacancy rate inched down just one-tenth of a point to 17 percent and landlords raised average asking rents only four cents to $2.24 a square foot, according to Jones Lang LaSalle Inc.
“It’s a tenant’s market,” said Trevor T. Belden, principal at Lee & Associates in Sherman Oaks. “Vacancy rates have dropped to a point where it seems like the down cycle is bottoming out.”
Typical of the kind of deals being reached by bigger tenants was the decision by Farmers Insurance to sign a five-year lease and expand by 27,000 feet at 6303 Owensmouth Ave. in Woodland Hills. The deal is estimated to be worth $3 million. Farmers now has 247,327 square feet at the building.
Meanwhile, entertainment companies were active in the East Valley. Most notable was a deal by independent production company Endemol. The producer of popular TV show “Extreme Makeover: Home Edition” leased 25,525 square feet at 5200 Lankershim Blvd. in North Hollywood. The growing company, whose hits include “Big Brother” and “Wipeout,” also leased space in West Hollywood.
The industrial market also got a boost when
Boulder Electric Vehicle leased a Chatsworth industrial building. The Colorado company plans to produce about 1,000 trucks a year for the California and Asian markets.
Ryan House, a vice president at the Jones Lang LaSalle’s Santa Clarita office, said he expects office landlords will continue to offer concessions such as free rent and building improvements even though tenants are in no mood to make big changes.
“In today’s market, companies don’t want to move if it’s not necessary,” said House. “You’re not seeing relocating occur. It has to do with costs it would take for companies to relocate.”
Colleague Dan Sanchez, an executive vice president at Jones Lang LaSalle, was in full agreement. “We’re not going to see substantial absorption anytime soon,” he said.
– Adam Popescu
Independent film production company Endemol leased 25,525 square feet in late March at the Academy Tower, 5200 Lankershim Blvd., in North Hollywood. Financial terms with landlord Jamison Services Inc. were not disclosed.
Farmers Insurance signed a five-year lease and expanded by 27,000 feet at 6303 Owensmouth Ave. in Woodland Hills. The deal is estimated to be worth $3 million. Farmers now has a total of 247,327 square feet at the building, owned by JP Morgan Asset Management.
Accounting firm White Zuckerman Warsavsky Luna & Hunt LLP moved to 15490 Ventura Blvd. in Sherman Oaks. The company signed a six-year deal for a full 30,310-square-foot floor. The deal is estimated to be worth $4 million.
Patriot National Insurance Group leased 14,557 square feet at LNR Warner Center IV at 21215 and 21255 Burbank Blvd. in Woodland Hills. Terms with landlord LNR Property LLC were not disclosed.
Boulder Electric Vehicle leased a 27,714-square-foot industrial building at 9655 Irondale Ave. in Chatsworth. The plant will produce about 1,000 trucks a year and employ 30 workers. The Lafayette, Colo., company plans to assemble vehicles here for sale in California and for export to Asia. Financial terms were not disclosed.
The Hilton Woodland Hills in Warner Center is preparing a renovation of up to $30 million of the suburban business hotel. Both interior and exterior improvements will be done on the 325-room hotel at 6360 Canoga Ave.