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Valley Brokers Predict '86 Will Be Good Year : Office Vacancies Expected to Decline as Area Continues to Attract Additional Enterprises

April 06, 1986|DAVID M. KINCHEN | Times Staff Writer

Despite office vacancy rates of 20% and more and a plentiful supply of industrial buildings, non-residential real estate brokers in the San Fernando Valley and Ventura County are optimistic about 1986.

Some comments from brokers, developers and others, to put the situation in perspective:

--"We had our best year ever last year, with $76 million in gross volume, up almost 9% from 1984, and a 54% increase in net profit," said Mike Zugsmith of Zugsmith & Associates Inc., a Studio City industrial/commercial brokerage concern.

--The current 19% office vacancy rate should drop to between 15% and 17% as new construction in the San Fernando Valley halves from 3.8 million square feet in 1985 to 1.9 million square feet this year, according to James C. Nolan, office properties specialist at Grubb & Ellis Co., a major brokerage firm.

--A 10-year lease valued in excess of $23 million--one of the largest ever in the San Fernando Valley--was executed Dec. 24 for all 228,000 square feet of the Chatsworth Tech Center by Symbolics Inc. for its Western operations headquarters. The lease was an excellent Christmas present for Terra Development Co., Santa Monica, developers of the 11.5-acre project at Canoga Avenue and Plummer Street in Chatsworth.

Late-Summer Relocation

Cushman & Wakefield represented both parties in the transaction. A late-summer occupancy is scheduled for the relocation from present quarters at 9655 Irondale Ave., Chatsworth, according to Minori Tonai, vice president, Western operations for the Cambridge,Mass.-based symbolic processing firm.

To John D. Montanaro, partner and chief financial officer of Terra Development, the transaction is an important indicator that Chatsworth retains its title of "Silicon Valley South."

--To the west, in the Calabasas area of Los Angeles County, high-tech and office activity is burgeoning in projects like Calabasas Tech Center near the intersection of Agoura and Las Virgenes roads. So far, four leases with a total value of more than $34.7 million have been negotiated by Coldwell Banker Commercial Real Estate Services in the 20-acre, seven-building project.

Major tenants include First Interstate Trust Co., with 70,000 square feet, with Coldwell Banker representing First Interstate; Protocol Computers, with 24,500 square feet, with Coldwell Banker representing Protocol, and Saki Magnetics, with 18,600 square feet, with Merrill Lynch Realty representing Saki.

Opening Branch Offices

Completion of the $26-million, 260,000-square-foot project is expected in July, according to Reed Tetrick of Jaric Developers & Contractors, Los Angeles, developer in joint venture with Ahmanson Commercial Development Co.

Responding to the demand in the western end of the San Fernando Valley and the eastern sector of Ventura County, architects and construction concerns are beginning to open branch offices in the area, usually in Thousand Oaks or Westlake Village.

Typical of the former is Barasch Architects & Associates Inc., based in Pasadena, with a branch office that opened last May near the Thousand Oaks city hall. The branch office has six employees, according to Stephen B. Barasch, the firm's president.

About the same time last year, Oltmans Construction Co., Whittier, opened a branch office in Westlake Village. Robert Larson, manager of the office, believes that it is much easier to supervise the many construction projects under way in the Ventura Freeway corridor with an office only minutes away than one clear across the vast Los Angeles basin.

Servicing Developments

Larson added that Oltmans, one of the top five general contractors in the Southland and one of the top 200 in the nation, opened the new office to service developments by Astral Properties, Thousand Oaks. Today, in addition to Astral, Oltmans builds for major Southland developers such as the Hewson Co., Cabot, Cabot & Forbes, the Sammis Co. and Meister Development Group.

Among the most recent Oltmans-built projects are Simi Freeway Commerce Center, a 50-acre development by Hewson at Easy Street and Ward Avenue, Simi Valley, and Camarillo Commerce Center, a 48-acre development north of the Ventura Freeway at Flynn and Adolfo roads in Camarillo.

The Simi project is a joint venture with Glenfed Realty Inc., while the Camarillo project is a joint venture with Hillman Properties West Inc.

James Nolan of Grubb & Ellis is somewhat less optimistic about the potential of the Conejo Valley, which he believes will tighten "in time" due to a limited supply of land parcels zoned for pure office development. Too, development of new space will decrease until the existing supply of office and R&D space is absorbed.

Major Beneficiaries

Western Ventura County, from Camarillo to Oxnard, Port Hueneme and Ventura, is attracting industrial as well as office users from coastal areas in Los Angeles because of lower land costs, less congestion and affordable (by Westside standards, at least) housing.

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