Commercial Building Booming, Experts Say
A strong economy, a large labor force and city governments willing to do business have triggered a boom in commercial development in the San Fernando Valley, commercial real estate brokers report.
The era of prosperity is also being experienced in the Santa Clarita Valley and, brokers said, to some extent in the cities of Burbank and Glendale.
“The exodus from the Valley that took place during the economic recession of the early 1990s has ground to a halt,” said Brent Weirick, a commercial real estate broker with the Seeley Co. of Los Angeles.
“Interest rates are at generation lows and lenders are eager to loan,” he said. “Companies are expanding and there are a lot of start-up companies. Developers are reacting by creating more supply.”
An increase in the number of building permits issued in the city of Los Angeles so far this year is further evidence of a rebound in commercial development.
In Los Angeles, building permits are up 13% from 6,481 in March through August 1997 to 7,309 during the same period this year, said David C. Keim, the city’s chief building inspector.
In the San Fernando Valley, Keim said, commercial building permits jumped 16% from 2,228 in March through August 1997 to 2,579 in the same time this year.
A spike in permit valuations--an assessment based on the size and cost of materials used in projects--shows that developers are building larger, more expensive commercial spaces in Los Angeles.
The total valuation of commercial building permits citywide rose 40% from $439,069,147 in March through August 1997 to $613,783,135 for the same six-month period this year, Keim said.
Valley commercial building permit valuations soared 56% from $144,965,120 during March through August 1997 to $225,580,546 during the same period this year, he said.
Commercial developers are attracted to the Valley for several reasons, said Douglas Brown, managing partner of Regent Properties, a Beverly Hills-based commercial real estate brokerage firm.
The Valley boasts a large labor pool that makes it easier for companies to find talent, he said.
In addition, Brown said, city officials are actively wooing commercial developments by streamlining the approval process or entering into private-public partnerships.
And corporate executives and employees weary of long commutes like the idea of being able to work and live in the same community, he said.
These factors prompted Brown’s company to build a $75-million campus-style office park called West Hills Corporate Village. The 600,000 square-foot development is being built on the site of the former Hughes Aircraft facility at the corner of Fallbrook Avenue and Roscoe Boulevard in West Hills.
Another indicator of the Valley’s commercial renewal is the 11-story 20th Century Plaza office complex in Woodland Hills, described as the city’s largest private office development in 10 years.
Also, a new 35-store complex at the former General Motors manufacturing plant in Panorama City is being hailed as an indicator of a retail renaissance in the northeast Valley.
The boom in commercial development is also being experienced on the other side of the Santa Susana Mountains.
One of the largest commercial development projects in the Santa Clarita Valley is the $100-million Valencia Town Center being expanded by the Newhall Land & Farming Co.
One addition to the 133,000-square-foot office, retail and entertainment complex is a six-story, 127,000-square-foot office building that will be the new corporate headquarters in November for Princess Cruise Lines, now based in Century City, said Marlee Lauffer, spokeswoman for the developer.
Last month, the $35-million Hyatt Valencia opened at Valencia Town Center, Lauffer said. The 244-room hotel and 15,000-square-foot conference center is the only full-service facility of its kind in the Santa Clarita Valley.
Although the city of Santa Clarita does not keep separate records for residential and commercial building permits, the number of all permits issued has risen 14% from 1,662 in January through August of 1997 to 1,896 during the same period this year, said city building official Ruben Barrera.
The valuation of the permits, he said, has risen 30% from $92.8 million in the first seven months of 1997 to $121.1 million during the same period this year.
In Glendale and Burbank, commercial development has grown in fits and starts this year, brokers said.
Media Studios North, a five-story, 215,000-square-foot office building adjacent to Burbank Airport, recently lured two new tenants to its commercial development nearing completion on Ontario Avenue.
Equilon Enterprises, an oil refining and marketing group founded by Shell Oil Co. and Texaco Inc., and IBM Corp.’s Microaddam will join Walt Disney Co. in Burbank’s newest office complex.
In addition, Brown of Regent Properties said his company has entered into a partnership with the city of Burbank to build a $60-million hotel, retail and office complex called Burbank Metropolitan Center, across from City Hall on North San Fernando Boulevard at East Olive Avenue.
Still, lease signings have been slow at Glendale Plaza, a 24-story luxury office project set to open in March. However, the developer, Pac-Ten Partners, says several lease closings are imminent.
According to figures compiled by the Construction Industry Research Board, a Burbank-based independent research group, commercial building permit valuations in Glendale fell from $64.1 million in the first seven months of 1997 to $41.7 million in the same period this year.
In Burbank, however, commercial building permit valuations rose from $8.8 million in the first seven months of 1997 to $27.3 million in the same period this year, according to board figures.
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Construction Rising
The number of building permits climbed 13% in Los Angeles and 16% in the San Fernando Valley from March through August since the same period last year.
* Building Permits
City (Up 13%)
1997: 6,481
1998: 7,309
Valley (Up 16%)
1997: 2,228
1998: 2,579
* Valuation of Commercial Building Permits
(in millions)
City (Up 40%)
1997: $439.0
1998: $613.7
Valley (Up 56%)
1997: $144.9
1998: $225.5
