The reports of the demise of the high-tech real estate market in the San Fernando Valley and Ventura County are greatly exaggerated, judging from activity by large and small developers alike.
Doug Sonderegger of the Sherman Oaks office of Coldwell Banker Commercial Real Estate Services said that while the high-tech market has slowed considerably from its "robust absorption of space" a few years ago, it is not at a complete standstill.
Deals are being made primarily with companies with government contracts or those bringing new high-tech products into the marketplace, he suggested.
Several companies are experiencing business reversals because of slowing sales and movement to overseas plants. This has resulted in a two-tier high-tech market, Sonderegger said.
The first tier consists of buildings that are newly constructed on recently purchased land, with ample parking and a high percentage of mezzanine space. The second tier consists of previously leased industrial buildings that have returned to the market, often at lower rates.
The second-tier phenomenon has occurred in Chatsworth, Northridge, Woodland Hills and adjacent areas. Occupancy factors are down, and landlords are concerned that continued production of new buildings will aggravate the situation, he said.
Traditional industrial activities or "low-tech" activities such as warehousing and fabrication have had a resurgence and are often leasing space in buildings that were originally improved for high-tech and R & D uses, he added.
Another bright spot in what is often a slow market is the record of multi-tenant projects throughout the Valley and adjacent areas. Such projects have buildings designed for the small space users, often from 1,500 to 2,500 square feet.
Two communities whose names begin with "V" are showing improvement, Sonderegger added. They are Van Nuys and Valencia.
Van Nuys, an older community that stretches from the east San Fernando Valley to several miles west of the San Diego (405) Freeway, is an attractive location to developers of office, R & D and corporate space, according to Sonderegger and his colleague, Carol Grant.
The Valley Corporate Park, at 16300 Roscoe Blvd., just north of the Van Nuys Airport, is being developed by the Linpro Co., a national development concern with Los Angeles offices at 11661 San Vicente Blvd., Brentwood. Designed for tenants who want airport access and a location away from the congestion of Ventura Boulevard, the five-building complex has about 160,000 square feet of space and is scheduled for completion this fall.
While the prime leasing area in the valley continues to be the Ventura Boulevard corridor, Grant said the 123,000-square-foot Sherman Way Plaza, 15350 Sherman Way (at Sepulveda Boulevard) in Van Nuys, is leasing very successfully. She attributes its success to good access to the San Diego and Ventura freeways, excellent parking and good support services in the area. Tenants include AT&T Communications (about 53,000 square feet), Valley Presbyterian Hospital, City Corp., Great Western and Hartford Insurance.
"Sepulveda Boulevard is experiencing new office construction all the way from Ventura Boulevard north to Sherman Way," Grant said.
Despite traffic congestion, the recently imposed height limit and other factors, buildings on Ventura Boulevard in Sherman Oaks and Encino continue to attract tenants from the Mid-Wilshire area, Century City and elsewhere in Los Angeles, Grant added.
She points to the success of the American Savings building cater- corner from the Sherman Oaks Galleria at Ventura and Sepulveda. Completed last January, the 375,000-square-foot building is now 76% leased.
Sonderegger said that Valencia and the Santa Clarita Valley in general have experienced rapid growth in recent years, a trend that shows no signs of weakening. The master-planned community of Valencia includes a 1,200-acre industrial park that attracts such firms as American Pharmseal Division of American Hospital, Lockheed-California and Sperry-Chivac. A 30-acre site within this industrial park was recently purchased by Katell Properties Inc., Torrance, with plans for development of about 500,000 square feet of industrial, office and high-tech space, he added.
Universal City continues to attract office tenants that once considered a Wilshire Boulevard address a necessary part of doing business, Grant said. By the end of the year, Texaco will have relocated from the Mid-Wilshire area to 10 Universal City Plaza, formerly called the Getty Tower. Another major tenant in the building is Traveler's Insurance, combining its Encino and Mid-Wilshire offices in 45,000 square feet of space.
By far the major single area for office space in that part of the San Fernando Valley within the Los Angeles city limits is Warner Center, Grant said. Voit Properties, Woodland Hills, currently has 1.7-million square feet planned. Leasing activity remains strong, with many tenants relocating from Mid-Wilshire, Century City and Westwood.