BUSTING OUT AND FILLING IN; DEMAND FUELS RUSH FOR FEW LOTS LEFT OPEN TO VALLEY INDUSTRY.

Byline: Gregory J. Wilcox Daily News Staff Writer

Veratex Inc., a manufacturer and distributor of high-end bed linens, was bursting at the seams. So management went shopping for a new factory.

At the top of the wish list: Size and location. Big, and close to the existing 50,000-square-foot facility in the 14600 block of Lanark Street in Van Nuys, were the key considerations.

Veratex, founded in 1991, simply wanted to remain in the San Fernando Valley.

``This company has always been in the Valley. We have a dedicated work force, we feel the people are what brought us here, and the last thing we wanted to do was move away and not be able to retain those workers,'' said Dale Talbert, the firm's vice president.

It took two years and $7.6 million to find the new home, and Veratex considers itself lucky because six other companies were interested in the same piece of recycled property.

Veratex's search - and the scramble to beat others to the deal once the site was located - is emblematic of the Valley's commercial market. Thanks to a hot regional economy and the fact that most of the Valley's large chunks of industrial or commercial land already have been developed, so-called infill developments like Veratex's are becoming commonplace.

For example, during the past 18 months, Van Nuys-based Delphi Properties has negotiated leases for 10 facilities ranging in size from 105,000 square feet to 200,000 square feet. Delphi helped relocate Ricon Corp., which makes wheelchair lifts, from Pacoima to The Plant, a sprawling mixed-use project at the former General Motors Corp. assembly plant in Van Nuys.

Now one of Delphi's clients is trying to put together a project in Pacoima by purchasing old houses in an industrial area, tearing them down and combining the lots into one large parcel.

That, though, is a slow and tedious process. And it can get complicated when zone changes and general plan amendments come into play.

``There is not a lot of opportunity to do that. We are frankly running out of land,'' said Ross Thomas, Delphi's managing partner.

For example, at the end of last year there was about 159.5 million square feet of industrial space in the Valley, with about 6 percent of it vacant, according to a recent study by Grubb & Ellis, a commercial and industrial brokerage.

And there was only 1.4 million square feet under construction.

``There is really not much for sale, either,'' said Alex Rietmann, research analyst at the Grubb & Ellis office in Sherman Oaks.

``It's a very tight market right now, especially in the older areas,'' he said.

Some projects on reused aerospace land probably will enter the marketplace this year.

One of those could be the sprawling 56-acre Marquardt Co. site near Saticoy Street and Hayvenhurst Avenue in Van Nuys. The company, which closed in 1993, used to make cluster bombs and space shuttle propulsion systems but lately some of the buildings have been used as sound stages.

Redevelopment is being planned on 36 acres, said Jim Shinehouse, Marquardt's president and chief executive officer. The company ultimately plans to sell the property, he said.

``We think it's a fabulous property in a fabulous location and we have many buyers who have expressed interest. Everybody is very anxious to move forward,'' he said. ``It's a great market.''

A similar project, the Lewis Business Center, a 19-acre parcel at Woodley Avenue and Strathern Street, used to house some operations of Woodland Hills-based Litton Industries Inc. That facility now contains 450,000 square feet of space and the last building was finished in mid-1998. Construction on the $30 million project started in late 1987 and took about 18 months to complete.

It was a case of supply finally hooking up with demand.

``The first phase was 360,000 square feet and we completed 85 percent of the leasing before the buildings were up,'' said David Hasbrouck, a broker at Cushman Wakefield who worked on the project.

The facility is being used for product distribution and light manufacturing.

Other brokers tell similar stories.

``The appetite for industrial product in the area has been pretty strong. It's just unfortunate that we don't have large, deliverable sites,'' said Todd Lorber, a broker at Grub & Ellis.

One of best examples of the infill development is The Plant, developed by Woodland Hills-based Voit Cos.

The facility first opened in December 1947 and General Motors cars rolled off the assembly line for 45 years. It closed in 1992 and remained shuttered for six years before commerce again was conducted at the site.

And it took more than $75 million to bring it back to life.

Eventually, five tenants will occupy 800,000 square feet of space, said Robert Lumley, Voit's vice president.

Putting these kinds of projects together can be challenging.

``The problem with the Valley is that there are no big parcels of land,'' said Lumley. ``Most of the time you are trying to put together a project by combining two or three smaller ones and that's hard to do. The Valley has been built out for quite some time so most projects will require demolition and rezoning.''

Demolition is going on right now at Veratex's new location on Arminta Street.

Talbert said his company's new factory can't be finished too soon. Sales at the privately held company hit about $30 million in 1998, double the 1997 level. They doubled on an annual basis during the year's first quarter, too.

``We can't hire any more people. We don't have anywhere to put them,'' Talbert said.

That will change during this year's fourth quarter, when Veratex moves into its new 140,000-square-foot facility complete with a showroom and corporate offices.

``We are so excited to be building our own facility from scratch and build it the way we want in the location we need,'' Talbert said.

CAPTION(S):

2 Photos

PHOTO (1--Color) Victor Aguillar works in the sewing area of Veritex Inc., a linen company fast outgrowing its Van Nuys facility.

(2--Color) Veritex executive Dale Talbert stands on the construction site of the company's 140,000-square-foot new home on Arminta Street.

Tom Mendoza/Daily News