EARTHQUAKE: THE ROAD TO RECOVERY : Scramble for Temporary Offices Slices Valley Vacancy Rate : Real estate: Other markets gain from displaced firms seeking quarters. Rents expected to climb soon.
Tenants scrambling for temporary quarters have sent office vacancy rates plunging in the San Fernando Valley, putting upward pressure on rents and bolstering other markets from Pasadena to Ventura County, real estate experts say.
The Northridge earthquake knocked out dozens of high-rises and millions of square feet of office space. As a result, leasing experts say the overall vacancy rate in the San Fernando Valley--the lowest in Southern California even before the quake hit--could fall to 7% by summer from 14.5% just a month ago.
Computer maker Packard Bell, which had announced its intention to move out of the area shortly before the temblor hit, has vacated its quake-damaged headquarters in Chatsworth and rented temporary office and manufacturing space for at least a year in Ventura County. Although office rents have not risen much following the Jan. 17 quake, most local brokerage experts say prices should start climbing soon.
“Although there is a tremendous short-term need for office space in the Valley, we haven’t seen a rise in the cost of rent,” said Seth Dudley, a leasing agent with Julien J. Studley in Westwood. “But as the dust settles and the vacancy rate goes down in a few months, the cost of the remaining space will start to creep up.”
One of the early winners in the search for new office space is the Conejo Valley, which includes Newbury Park and Thousand Oaks. More than 500,000 square feet of empty space was rented in the area in the two weeks following the quake, according to the Conejo Valley Chamber of Commerce.
Quake-related deals have also helped fill the 434,000-square-foot Studio Plaza office development in Burbank. Among the new tenants: the Motion Picture Assn. of America and the Alliance of Motion Picture and Television Producers, which is temporarily relocating from its damaged headquarters in Encino.
Broker Mike Zugsmith, president of Zugsmith-Thind in Burbank, said he expects the demand for temporary office space to send the vacancy rate into single digits within weeks and cut it in half in the coming months.
“But long-term,” he said, “my sense is that the quake will have little impact overall. Many of these temporary leases will wash out in the next month to two years, when tenants displaced by the earthquake begin moving back to their repaired or rebuilt buildings.”
In many cases, tenants are bound by lease agreements to reoccupy a building after it is repaired or rebuilt, Zugsmith said.
Packard Bell decided to lease a 160,000-square-foot building in Westlake Village for its temporary headquarters and a 176,000-square-foot building in Camarillo as a manufacturing center for its personal computers. Before the quake left its Chatsworth headquarters badly damaged, the company, which employs 1,600 people, was reportedly planning to move to Palmdale or out of state.
