Q2 2015 San Fernando Valley and Ventura County Office and Industrial Market Repor4

Vacancies Fall to Single Digits in Some Submarkets as Rents Rise and Sales Activity Escalates

A strong economic rebound in several industries is escalating leasing activity and rapidly filling office space in select submarkets. Business is particularly strong for media and tech companies, financial companies, especially those that support real estate, and professional services firms including accountants and attorneys. These companies are expanding and creating brisk demand for office real estate.

Vacancies declined by 80 basis points (bps) in 2015 as leasing remained consistently active. The Los Angeles North office market finished the year with a vacancy rate of 13.1 percent, the lowest level since the third quarter of 2008 when vacancies were 12.8 percent.

 Leasing activity for the full year totaled 4,366,248 square feet, with 1,873,763 square feet of gross lease activity occurring in the second half of the year. The activity drove quarterly absorption to the highest levels in 11 quarters. In the fourth quarter, 383,100 square feet of space was leased on a net basis compared with negative absorption of 83,324 square feet in the prior quarter and 270,484 square feet of net leasing in the year ago period.

For the full year, 580,900 square feet of space was absorbed on a net basis, falling short of the 954,500 square feet absorbed in 2014, but more than twice the amount of space absorbed in 2013.

New media and tech tenants in particular are driving office demand in a number of submarkets and pushing vacancy levels down to single digits. Downtown Burbank, with vacancies of 6.4 percent; Universal and Studio City with a vacancy of 7.9 percent, the East Valley with a vacancy rate of 8.5 percent, are among the beneficiaries of the increased demand.

As the market tightens, asking lease rates are rising to their highest levels since the second quarter of 2010. At year end, lease rates averaged $2.35 per square foot, up $0.02 per square foot from the prior quarter and $0.05 versus the year-ago period.

A total of 90 office building sales were transacted in the full year, more unit transactions than in any year since 2005. Sale activity has been limited only by the lack of available product and there continue to be many more buyers than sellers in the marketplace.

Leasing and Absorption Slow as Vacancy Rates Decline to a Historic Low of 1.9 Percent

As expected, leasing activity began to slow in the fourth quarter as industrial space became impossibly hard to find. Just 438,793 square feet of space was leased, compared with 778,854 square feet in the prior quarter, and barely one quarter of the 1,758,015 square feet leased in the comparable year-ago period.

Leasing has not been this slow since the fourth quarter of 2008 in the peak of the recession, but the slowdown is understandable given vacancy levels of 1.9 percent as of the fourth quarter. The tight market is also taking a toll on absorption which declined to 481,100 square feet in Q4 compared to 741,826 square feet in the prior quarter.

The recent announcement that Xebec and Cor­nerstone Real Estate Advisors will be construct­ing two warehouse buildings totaling 361,000 square feet in Sun Valley, was welcome news to this space constrained region, but the new buildings will do little to solve the challenges that most of the businesses in the area are fac­ing.

Average asking lease rates are not showing any statistical increases, but the data is somewhat misleading. In some submarkets such as Bur­bank, warehouse inventory is being taken over for creative office uses at rates considerably higher than the averages. The same is true for newer buildings where deals are being consum­mated at average rates closer to $0.80 - $1.00 per square foot compared to the overall, $0.69 per square foot averages.

The desire by business owners to control costs in this rising rate environment, coupled with the continuing low interest rates, is driving an extremely active sales market for industrial properties and, here too, the statistical mean prices don’t always reflect the real dynamics underway.

Still, even the data suggests that building prices are escalating dramatically. For the full year 2015, 172 sales took place at a median price of $142 per square foot, up 28 percent from pre-recession prices. The fourth quarter saw median prices rise 42 percent to $201 per square foot versus Q3 and 76 percent com­pared to the year-ago period.

Slow Job Growth Puts Ventura County Office Market Behind Its Neighbors

The Ventura County office market continues to make strides toward recovery. At the same time we are still seeing some volatility, and the office sector here is still lagging some neighboring markets.

The office market results reflect findings by economists that job growth in Ventura County has been very lackluster. According to the Center for Economic Research and Forecasting at California Lutheran University in Thousand Oaks, jobs will grow at a meager 1.1 percent for the remainder of the year. The report found that job growth is part of a larger picture of weak population growth related to high housing costs and little new housing construction in Ventura County

Just slightly more than 1 million square feet of space was leased over 2015, about 500,000 square feet less than in 2014, and while Q4 vacancy rates fell 130 basis points (bps) versus Q3, the current 14 percent level still fell short of the comparable year ago period when vacancies registered 13.3 percent.

A total of 252,800 square feet of space was absorbed in the fourth quarter, compared with negative absorption of almost the same amount, 252,770 square feet, in Q3, suggesting that at least some of the activity in the market reflects internal movement, not new leases. For the full year, absorption was negative 49,700 square feet, another indication that leasing activity is being driven by companies relocating within the area.

Nevertheless, lease rates are showing fairly steady increases. Direct asking rates averaged $2.01 per square foot in Q4, a $0.02 increase over Q3 and $0.04 per square foot more than the year-ago period.

As has been the case throughout the year, sales activity is very strong. The median price of buildings sold in the fourth quarter rose 33 percent to $260 per square foot, compared to Q3 and 53 percent versus the year ago period. For the full year, the median price of office buildings sold was $203 per square foot, a 20 percent increase over 2014’s median price of $169 per square foot.

Ventura County’s Industrial Vacancies Decline to 4.3 Percent Restricting Options for Tenants

More than 3 million square feet of industrial space was leased in 2015 pushing a 25 per­cent year-over-year increase in absorption and driving vacancy rates down to their low­est levels since the fourth quarter of 2008.

Although leasing was less active in the fourth quarter than it had been in the rest of the year, the activity throughout the year and par­ticularly in the first half of 2015, was enough to push absorption to 703,600 square feet for the quarter and 1,437,000 square feet for the year. (Leased space is not counted in absorption figures until the tenant moves into the space.)

Just 468,811 square feet of space was leased in the quarter, less than the 546,804 square feet leased in Q3 and a little more than half the space leased in the year-ago pe­riod. Indeed, the majority of the year’s leasing activity, about 2 million square feet, occurred in the first half of 2015. Along with the sharp decline in vacancies to 4.3 percent, the num­bers indicate that many tenants are choosing to remain in place as space becomes harder to find.

Vacancies have fallen nearly 200 basis points from the 6.2 percent registered in Q4 2014, and are just 3.1 percent in the Oxnard submarket, 2.1 percent in Newbury Park/ Thousand Oaks and 2.8 percent in Ventura.

Although average asking lease rates slipped to $0.62 per square foot versus $0.65 per square foot in the prior quarter, a look at ask­ing rents by size range paints a very different picture of the market. While average asking rates for spaces larger than 20,000 SF have decreased, rates for space in the 5,000 – 10,000 square foot range have soared near­ly 12 percent over the past year, and at the close of 2015 averaged $0.85 per square foot.

As with leasing, the sales sector reflects considerable strength in Ventura County’s economy. The median price of industrial buildings sold in Q4 was $115 per square foot, unchanged from the prior quarter and a 22 percent increase over the year-ago period when the median price of buildings sold was $94 per square foot. As is occurring in the leasing sector, sales activity was hampered only by availability.

Lee & Associates Commerical Real Estate Services - LA North/Ventura, Inc.

Thousand Oaks Medical Office for Lease - Suite 205 Video Tour

Thousand Oaks Medical Office presents suite 205 at the Rolling Oaks Medical Center. The suite has a double door entrance off the second floor lobby, directly across from the elevator. The medical office has a private back entrance and exit, private waiting room for patients, medical staff administration room, 2 filing and lab rooms, 2 exam rooms, private restroom, consultation room and windowed office.  The medical suite is located at 425 Haaland Drive, Thousand Oaks.  

http://www.thousandoaksmedicaloffice.com/425-halland-drive/

Westlake Village Office For Lease - North Ranch Atrium Suite 230

The North Ranch Atrium in Westlake Village offers a professional office suite available for lease.  The entrance faces the tranquil atrium with lush landscaping and water features. The inviting reception area is combined with an open bullpen area or flexible creative space. There are 2 private windowed offices and 1 interior office or conference room. As a additional feature, the unit also has a private restroom.  The efficient office space is perfect for a professional business or organization looking to rent office space in Westlake Village.

The New Standard - Marketing Commerical Real Estate

The opportunity came my way from my best friend. I was about to learn from a test project about social media marketing in real estate.  Still to this day, majority of the commercial real estate broker dismiss most of the forwarding thinking technology that is already here. This is due primarily to their long client based relationships and tenner in the industry.  

The test project was to assist in the marketing efforts towards exposing an estate to the digital world. Already was an amazing video tour with aerial views taken from a private aerial videographer and a visually appealing web site. The challenge was that there were not many views or visits to the website. The plan was to create a full circle using the other social media platforms such as Facebook and Twitter and utilize all the social media vehicles in sequence to lead followers to the web site.  The truth was that I didn't completely understand how everything was going to work out.  Setting up the accounts were fairly easy and the rests was manpower. The plan was to make as many authentic connections and continue to post daily relevant posts.  The Facebook advertising dollars also assisted greatly. Facebook advertising has a user friendly demographics targeting strategy. Without a doubt, this made a significant difference in targeting new traffic to the site.  The end result was success. I was able to significantly increases to the landing page visiting and expose the estate to a much larger digital world.

Through this experience, I learned a valuable lesson about the social media world and how it might work in commercial real estate.  The next project that I would experiment with would be for an office building in Woodland Hills. When traditional commerical real estate marketing efforts needed some additional support, this is what happened. Stay Tune. http://woodlandhillsoffice.com/

Thousand Oaks Medical Office For Lease - Rolling Oaks Medical Center

The Rolling Oaks Medical Center is a Class "A" Medical Office campus in Thousand Oaks. The campus has several medical office buildings with a diverse mix of health care specialists. 375 & 415 E. Rolling Oaks Drive and 425 Haaland Drive make up 3 of the buildings within the medical center and offers several available medical suites for lease. The location has a built-in network of physicians and houses the Thousand Oaks Medical Hospital, part of the Los Robles Hospital and Medical Center.  Located in the beautiful rolling hills of Thousand Oaks, the property has convenient access to the 101 Freeway.

http://www.thousandoaksmedicaloffice.com/

Simi Valley Office For Lease - Simi Valley Business Center

40 West Cochran Street is a professional office building for lease in Simi Valley. The building offers a variety of functional suites. Several of the office suites have terrific windowline, reception area, conference room, open cubical area, storage closets and more. The building can provide up to 4 per 1,000 parking and is elevator served. Additionally the building provides 5-day suite janitorial service and utilities.
Located across the street from Costco, 40 West Cochran has excellent freeway access to the 118 Freeway. This Simi Valley office for lease is located near Wood Ranch and the Conejo Valley and is centrally located between Santa Barbara and the Los Angeles Counties.

Q4 2014 Office and Industrial Market Report San Fernando Valley

Office Market Makes Significant Strides as Absorption Rises Three-Fold vs. 2013

What a difference a year makes! The banner recovery in the office market was marked by huge improvements in absorption and a steep drop in vacancy rates compared to 2013.

For the full 2014 year, absorption increased nearly three-fold to 954,500 square feet compared to 241,400 square feet of net absorption for 2013. Vacancy rates, which have been declining for seven straight quarters, ended the year at 13.1 percent, down 180 basis points (bps) over the fourth quarter of 2013; and the median price of buildings sold in 2014 increased 17 percent to $189 per square foot compared to a median sale price of $161 per square foot in 2013.

Leasing activity slowed in the fourth quarter, with 676,067 square feet of office space leased compared to 949,761 square feet of leasing in Q3, and 1,699,334 square feet of leasing in the year-ago period. However, current leasing activity more closely approximates the leasing levels we saw quarterly prior to the recession, indicating that the market is simply returning to more stable, prerecession levels.

Similarly, average asking lease rates are not showing a great deal of movement. The average asking rate was $2.26 per square foot in the fourth quarter, unchanged from the prior quarter and just one penny more than the rate in the year ago period. But the averages do not reflect the recovery in some Class A buildings in primary submarkets such as Sherman Oaks, Calabasas, Studio City and the East Valley where landlords are commanding lease rates in excess of $3 per square foot.

For the year, 65 office buildings traded, somewhat less than the 83 buildings sold in 2013, but the sales sector was far more active than it had been earlier in the recovery. There were 47 building sales in 2012 and just 31 in 2011.

A total of 10 buildings traded in the fourth quarter at a median sales price of $225 per square foot, a 49 percent increase over $151 per square foot for the fourth quarter of 2013. Among them, the 44-acre Northridge Business Center which will undergo redevelopment.

Severe Shortage of Product to Lease Contributes to Most Robust Sales Activity Since 2006

 The Los Angeles North industrial market has become impossibly tight, leading to a falloff in leasing activity and with it, weak­ening absorption rates. On the other hand, sales activity has been robust as compa­nies unable to find space to lease are turn­ing to acquiring facilities, especially with today’s low interest rates.

The vacancy rate in the fourth quarter dropped to 2.4 percent from an adjusted 2.7 percent in the third quarter and 3.9 percent in the year-ago period. Even more telling, if you remove the space available in the Antelope Valley and the Santa Clarita Valley, vacancies would be 1.6 percent.

Considering the tight market, leasing activ­ity held up pretty well in the fourth quarter with 1,013,034 square feet of deals trans­acted, just slightly less than the 1,247,788 square feet of space leased in the prior quarter, but nearly one half million square feet less than the year-ago period. Lease rates have risen 8 percent compared to the year-ago period and are now averaging $0.67 per square foot.

Last year at this time the market was still giving back space with a number of sub­markets reporting more space vacated than was leased. Just 283,100 square feet of space was absorbed in the full 2013 year as a result. By comparison, full year absorption for 2014 was 1,842,100 square feet, with virtually no negative ab­sorption anywhere in the region. But ab­sorption has been trending downward on a quarter-to-quarter basis as the market has tightened. In Q4, 319,100 square feet of space was leased on a net basis compared with 373,472 square feet of absorption in Q3.

There were 104 industrial building sales in the region in 2014, more than in any other year since 2006 when 117 buildings traded hands.

While median sale prices have been ris­ing steadily since 2011, prices have still not caught up with the market peak. For 2014, the median price of buildings sold was $118 per square foot, an 8 percent increase over 2013 and 12 percent high­er than 2012 when the median price of buildings sold was $105 per square foot.

Freestanding Northridge Office Available for Lease

https://www.facebook.com/NorthridgeOf...

Full Video https://www.youtube.com/watch?v=NFUs2fTNZG0

9255 Corbin Avenue offers an open and clean atmosphere for a variety of custom floor plans such as a tenant looking for a creative office space or a traditional corporate layout with unique finishes. Ideas for both single and dual tenancy office spaces include efficient designs coupled with creative features. The high ceilings, open space and rear loading can be utilized or converted for a space that's both functional and customized to suite a specific business operation. The property has terrific window line along the perimeter of the building for natural lighting and a healthy working environment. Parked at a ratio of 3 per 1,000, the building can accommodate a variety of light and heavy employed office users looking for space in a convenient area of Northridge with a variety of local amenities. The building is located within the Los Angeles State Enterprise Zone and brings added benefits to industries looking to relocate their business or head quarters to this location.
This Northridge office space is located on the signalized corner of Corbin Avenue and Prairie Street and has great street exposure. 9255 Corbin Avenue is centrally located in Northridge with easy access to the 118 Ronald Reagan, 101 Ventura and 405 Freeways and just west of the Northridge Fashion Center (Northridge Mall). The location of this Northridge office building is a few minutes from Cal State University Northridge (CSUN) -- home of the Matadors and other major employers. A variety of amenities in Northridge include a variety of eating establishments at and near the Northridge Fashion Center, Northridge apartment and senior living centers and the Northridge Hospital Medical Center.

Northridge is located in the northwest San Fernando Valley just north of Los Angeles city, south of Santa Clarita and Valencia, east of Ventura County and in the Los Angeles County.
Cities located adjacent to Northridge are Winnetka and Reseda to the south, Porter Ranch to the north, Chatsworth and West Hills to the west and North Hills and Granada Hills to the east.
Major thoroughfares close by are Corbin Avenue, Tampa Avenue, Wilbur Avenue, Reseda Boulevard, Winnetka Avenue, Plummer Street, Nordhoff Street, Lassen Street, and Devonshire Street.

Rent Woodland Hills Office - Carlton Plaza Spec Suite Available for Lease

Carlton Plaza Office in Woodland Hills offers turn key spec suites ready for move in. This fine example displays the types of building standard finishes from top to bottom.  At Carlton Plaza Office, our spec suites will certainly give any new tenant the assurance of a most professional image quality. We pride ourselves in providing the most functional and image conscious office layouts.

Rent Woodland Hills Office - Carlton Plaza Office for Lease Suite 206

Office suite 206 at Carlton Plaza Office in Woodland Hills offers a turnkey suite perfect for a small company or organization looking to have all the amenities of a prestigious address on Ventura boulevard and be located in a great Woodland Hills Office building. The suite is located on the 2^nd floor. As you exit off the elevators, you turn left and will be at the entrance of suite 206 on the right hand side. The suite offers one larger private office with terrific window line and open space as you enter the office. There are several ways to utilize this turnkey office suite and office setup for you new space at Carlton Plaza.

Rent Woodland Hils Office Space - Carlton Plaza Office for Lease Suite 203

Office suite 203 at Carlton Plaza Office in Woodland Hills offers a professional office, turnkey opportunity to be located in one of Woodland Hills premier offices located on the prestigious Ventura Boulevard.  The suite has one private window lined office and one window lined conference room or large executive office.  After entering the premises, you have the opportunity to create a reception area and multiple work stations. The space is ready for immediate occupancy.

Q2 2012 San Fernando Valley Analysis Office Market Report

                        Q2 2012 San Fernando Valley Office Report (Click Here)

Q2 2012 San Fernando Valley Industrial Report (Click Here)

Woodland Hills Office - Ground Floor Office Space For Rent

Carlton Plaza Office For Lease

http://woodlandhillsoffice.com/

What Type of Commerical Lease Are They Asking?

There are a variety of lease types in Commercial Real Estate.  Having a basic understanding of the most commonly used lease types will help you make a better decision when looking for a space to rent.  For example, you are interested in comparing 3 commercial spaces and all identical sizes.  Space 1 is offering $2.35 (FSG) Full Service Gross per sq. ft.  Space 2 is offering $2.25 (MG) Modified Gross per sq. ft.  And Space 3 is offering $1.55 (NNN) Net Net Net per sq. ft.  From the surface the $1.55 NNN sure looks attractive, but beware, that’s not always the case.  Also, lease terms may have slightly different meanings depending on who you ask.

Full Service Gross (FSG): Monthly rent included utilities, janitorial services, taxes, insurance and common area maintenance. In simple terms, the rent includes everything except for you phone and internet.  Also, parking might have an additional cost depending on location. This type of lease is very typical for office buildings. The Landlord is however able to pass on your pro rata share of any annual increases in operating expenses for the following year.  Office buildings also have typical office hours of operation. This means that your Heating, Ventilation, and Air Conditioning (HVAC) will be limited to only those hours.  Most buildings charge for after hour usage should you request access to the HVAC during those times.

Gross Lease: Monthly rent includes maintenance, taxes and insurance. You are responsible for the cost of your own utilities, janitorial, phone and internet.  This is commonly used in multi-tenant commercial buildings.  This type of lease when referred to an Industrial building is sometimes known as an Industrial Gross lease.  If your work hours are early morning, late nights and weekends, this type of lease might be better for you.

Modified Gross Lease (MG): Monthly rent includes a separate charge (e.g. common area maintenance (CAM), janitorial, proportionate share of water) TBD by Landlord. This is typically a hybrid of a Gross Lease.  In this case, you would need to find out from the Ownership exactly what additionally you would be responsible for.  This type of lease is commonly used in multi-tenant commercial buildings. 

Triple Net Lease (NNN): In addition to monthly rent, the tenant is responsible for paying their estimated pro rata share of taxes, insurance, utilities, janitorial service and all common area maintenance.  Any expense to the property can be passed on to the Tenant. This is typically billed to the tenant on a monthly basis in addition to their monthly base rent.  At the end of the year, semi-yearly or quarterly year, if the actual total NNN’s are different, either the Landlord or Tenant will be responsible for the difference in credit or payment.  NNN charges on average can be as low as $.15 per sq. ft. to as large as $1.20 per sq. ft. or higher.  Now depending on the person you ask, the roof and structure of a building may or may not be the Tenants responsibility.  On a lease called an Absolute NNN Lease, the Tenant is responsible for Roof and Structure, however on a NN Lease the Tenant is not responsible.   The monthly base rent might be look appealing, however be careful and know what the NNN charges are so you can budget accordingly. This type of lease is typical on Retail Storefront, Shopping Centers, and Single Tenant Commercial Buildings and favors the Landlord.

Leasing Space? What you need to know! BOMA, Rentable vs. Usable

Buildings are typically measured using a standing method called “building owners and managers association” or BOMA measurement standards. 1915 BOMA first published an accepted and approved methodology of floor measurement for office buildings by the American National Standards institute.  As design standards have changed throughout the years, so has the way BOMA measurement standards are used.

Area calculations from field measurements will most likely never be exactly the same, but considered accurate when results are within 2% or less.

Building measurements are given in terms of Rentable Square Foot (RSF) and Useable Square Foot (USF).  The RSF is the USF plus the Common Areas.  Common areas are considered to be restrooms, elevator lobby, hallways, stairwells, mechanical rooms, etc. These areas are not exclusive to any one tenant, but are shared by all tenants.  Let’s say for example the total RSF of an office building is 10,000 sq. ft. and the Common Area is 1,500 sq. ft .  10,000 sq. ft. - 1,500 sq. ft. = 8,500 sq. ft. of USF.

 A Load Factor is a multiplier to a tenant's USF that accounts for the tenant's proportionate share of the common area.  A load factor can typically range from 15% to as high as 30% for a multi-tenant floor.  In the above example the load factor is 1,500/10,000=15%

For example, leasing a 2,000 sq. ft. office space with a Load Factor of 15% would give you (2,000 sq. ft. – 15% = 1,700 sq. ft.) of Useable space.

Higher load factors may not always mean less, as often times other amenities such as atriums and spacious lobbies are appealing to clients and guests.  Also to note, Tenants occupying an entire floor will not have shared hallways or shared bathrooms and can be charged a lower load factor than a tenant on a multi-tenant floor as their common area will be less.  Knowing your load factor can really save you a lot of money.

Woodland Hills Class A Office For Lease - Warner Premier Tour

 Warner Premier is a Class A professional office building is centrally located in the Warner Center and the city of Woodland Hills. This prime Warner Center location has great visibility and convenient access to the (101) Ventura Freeway.
The address is 5550 Topanga Canyon, Woodland Hills and is located on the signalized corner of Burbank Boulevard and Topanga Canyon Boulevard. This location also benefits from the State Enterprise Zone. The property features highly efficient floor plates, abundant window lines and state of the art security and HVAC system. Warner Premier is parked 3.5:1,000 and offers both reserved and covered parking.
For more information and availability of space for lease, please contact Eric Nishimoto at the Calabasas Lee & Associates 818-223-4388

San Fernando Valley & Conejo Valley 1st Quarter Office and Industrial Market Report

The San Fernando Valley and Conejo Valley leasing market continues to slowly move forward. Landlords are trying to keep LEASE RATES as high as possible. In turn giving tenants free rent to mitigate the difference in asking rates verses actual lease rate. Short term deals in AS-IS condition is very common to smaller types of tenants. Tenants are still shopping the market to use as a negoiating tool as their lease comes closer to it's end.  The renewal lease market is still very strong but at discounted rates and a lot of free rent.    

Click on the Full Report Link below to see the entire 1st quarter report.

San Fernando Valley Office Asking Rates 

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San Fernando Valley Industrial Asking Rates

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Ventura Office Asking Rates

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 Ventura Industrial Asking Rates

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