Q2 2014 Office and Industrial Report San Fernando Valley

A Surge in Leasing Activity and Marked Improvement in Employment Drives Vacancies Down and Lease Rates Up

Another surge of leasing activity and marked improvement in employment levels drove office vacancy rates down to 15.5 percent in the second quarter compared to 15.8 percent in the prior period. Vacancy has improved by 150 basis points (bps) compared to the year-ago period.

There were 1,355,898 square feet leased in the quarter, up nearly 20 percent over the prior quarter although 365,762 square feet less than the space leased in the year-ago period. Velocity declined 18 percent from the first half of 2013 as well. A total of 2,492,863 square feet was leased in the first half of 2014 versus 3,039,301 square feet leased in the first half of 2013.

But the modest slowdown comes as lease rates show increasing strength. The average lease rate in Q2 was $2.27 per square foot, up $0.03 per square foot from the prior quarter and $0.05 per square foot compared to the year-ago period. Indeed, much of the pressure landlords were feeling to lease their buildings last year has subsided, and the average asking rate in the current quarter is the highest we have seen in the market since the fourth quarter of 2010.

It should be noted however, that average asking rates are still16.5 percent off their highs of $2.72 per square foot in Q2 2008

Absorption has been positive for the past four quarters with another 210,100 square feet absorbed on a net basis in Q2. This follows a Q1 absorption rate of just 59,131 square feet and a significant improvement from the year ago period when 179,715 fewer square feet were leased than were vacated.

Median sale prices for office buildings have been trending upward for the past three quarters and registered $196 per square foot in Q2 with a total of 10 buildings sold. Including distressed sales and those for which no sale price was reported, the median price was $230 per square foot with a total of 12 building sales.

Year to date the median price of buildings sold in the region was $190 per square foot. There were 22 office buildings sold in the period. Prices have risen 6 percent compared to 2013 when the median price of buildings sold was $179 per square foot.

 Industrial Vacancies Continue to Fall and Sales Momentum Builds

 Vacancy levels in the Los Angeles North in­dustrial market fell even further and the steady pace of absorption continued in the second quarter.

Vacancies declined to 3.4 percent in the quarter, down 20 basis points (bps) from the prior period and 110 bps compared to the year-ago period. Nine of the area’s 13 sub­markets are now showing vacancy levels be­low 3 percent leaving few options for tenants looking for industrial space.

Absorption has been very strong, and in Q2 2014 354,300 square feet was leased on a net basis. By comparison, 423,752 fewer square feet were leased than were vacated in the second quarter of 2013. For the year to date, 1,034,000 square feet of space was absorbed versus 233,723 square feet of ab­sorption in the first half of 2013.

With the steady pace of improvement, land­lords are beginning to increase rents. After more than two years with little change in lease rates, the average rate rose by $0.02 per square foot compared to the prior three quarters to $0.64 per square foot and by $0.03 per square foot versus the year ago period. The last time average lease rates were $0.64 was the third quarter of 2009.

While rock-bottom vacancy levels and expec­tations that lease rates will continue to rise are fueling investment activity, the shortage of suitable buildings is spurring more busi­ness owners to opt for purchasing rather than leasing their space. In the year-to-date period 42 industrial buildings were sold at a median price of $128 per square foot, an in­crease of 17 percent in the price of buildings sold compared to 2013. Sale prices have risen 28 percent over the past two years.

For the most recent quarter, 19 buildings were sold at a median price of $120 per square foot. Including distressed properties and those for which no sale price was report­ed, 25 buildings were sold at a median price of $119.

Much has been written recently about the constrained supply for industrial buildings, and nowhere is that more true than in the Los Angeles North market. The conversion of much of the area’s manufacturing real estate to multifamily or retail space and scarcity of raw land has left few opportunities for the development of new inventory, and a mere 59,000 square feet of new industrial con­struction is currently underway.

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)

Northridge Office Space Available for Lease

Plaza De La Cordillera, a Spanish style office building located at 18860 Nordhoff Street, Northridge.  The city of Northridge is a community in the San Fernando Valley, a part of the County of Los Angeles.  18860 Nordhoff Street, Northridge office building is centrally located with education, employment, health care, shopping and entertainment. California State University Northridge, CSUN, Medtronic, Northridge Hospital Medical Center and the Northridge Fashion Center, all within close proximity.  
Plaza De La Cordillera was built in 2001, recognizing the historical influence of the Southwest Americas on the soils of this thriving modern community of Northridge.  From the Spanish tiles and classical styled fountains to the architecture commissioned by Frank Gehry, Plaza De La Cordillera is truly one of a kind office building.  The artistic landscape and the calming water features brings a relaxed setting but professional image for any corporate office looking for an appealing headquarters in this vibrant city of Northridge.

For more information and office leasing availability, please contact Eric Nishimoto or Jay Rubin at Lee & Associates -- LA North/Ventura, Inc. at 818-223-4388.       

18860 Nordhoff Street, Northridge located on the signalized corner of Nordhoff Street and Wilbur Avenue. Other thoroughfares close by are Reseda, Corbin, Plummer, Parthenia, Tampa, Winnetka, Lassen, Lindley, Roscoe, Devonshire, Mason, White Oak, Balboa, Zelzah, Strathern, Saticoy, Sherman Way, Chatsworth, De Soto, San Fernando Mission, Rinaldi, Topanga Canyon, Vanowen, Victory, Oxnard, Ventura, Burbank, Hayvenhurst, Woodley, Haskell, Sepulveda and 118 Ronald Regan Freeway, 405 San Diego Freeway, 101 Ventura Freeway.

Servicing the Los Angeles County & Ventura County and surrounding areas of the San Fernando Valley & Conejo Valley: Chatsworth, Canoga Park, Winnetka, West Hills, Woodland Hills, Warner Center, Reseda, Van Nuys, Granada Hills, North Hills, Northridge, Porter Ranch, Tarzana, Encino, Sherman Oaks, Valley Village, Studio City, Lake View Terrace, Lake Balboa, Shadow Hills, Sun Valley, Sunland, Tujunga, Toluca Lake, Valley Glen, North Hollywood, Sylmar, Van Nuys, San Fernando, Arleta, Panorama City, Pacoima, Burbank, Glendale, Hidden Hills, Calabasas, Agoura Hills, Westlake Village, Newberry Park, Thousand Oaks, Oak Park.

Northridge Office Space Lease Rent Available Nordhoff Street Valley Porter Ranch Reseda University Lee Associates Nishimoto Work Location Headquarters Company CSUN Conference Lobby Leasing Renting Medical Financial Mortgage Bank Retail Institution Credit Card Stocks Bonds Insurance Loan Technology Education Culture Historic Fashion Shopping Employment Health Care Community Broker Los Angeles

Lee & Associates - LA North/Ventura Commercial Real Estate San Fernando Valley Business Journal

Uncovering Opportunities and Creating Outstanding Results!

Still a challenging market ahead for 2011, but many commerical real estate investors once on the sidelines in 2009 and 2010 are beginning to re-enter the real estate market and plan to be active this year. 

 http://www.lee-associates.com/global/about-media-article.php?TeamId=6&IdCat=0&id=1609

San Fernando Valley Buildings Getting New Firerry Look

I recently got a call from a client of mine who reported that there was a fire in his shopping center in North Hills.  Aside from the bizarre entrance into the burnt space through a hole in the wall from the tenant next door (that's how they got in) we also noticed the new skylight remodeling where the fire department battled the blaze and salvaged the rest of the building.

Driving on Corbin in Northridge, I noticed a shopping center with distinct firerry charcoal look on the second floor. 

Over the past weekend, yet another fire in Van Nuys almost decided to take out another building a client of mine had interest in. 

Are the  summer days already here? Did we forget that all this rain gave way to new growth in the mountains and valleys. They will dry up you know.

I think something smells burnt! Is my firerry theory up in smoke or really a scheme businesses underwater can make out good from a bad situation. 

 A close friend of mine in the insurance biz had mentioned to me that there has recently been a string of  large insurance payouts for business owners in similar businesses that went up in smoke. It just so happens they lost all their non-selling inventory and business to a fire.

Vacancy has been on the rise. Recent insurance $/SF has jumped 10 fold due to vacancy. Why, the probability of vandalism is always greater in shopping centers with vacancy. Not to mention all the properties with debt service too great to carry for owners. O ya, I forgot that there are taxes and insurance to pay as well.  Can a landlord afford this kind of price hike on insurance. I suppose on the other hand, if you were a landlord also underwater with a vacant building, a firerry makeover might have crossed your mind at one point. But we all know that's against the law.