Demand for office and industrial space is still strong in parts of Los Angeles County.

Demand for office and industrial space is still strong in parts of Los Angeles County

Leasing activity in many of the office and industrial parks throughout the Southland has definitely slowed with the overall real estate market, but the diversity of the local economy has resulted in a continuing demand for quality product in growth areas. One of the hottest areas of office & industrial park development is taking place in the northern reaches of Los Angeles County these days.

Government officials are becoming increasingly agreeable to allowing large tracts of residential land to be rezoned and developed into office and industrial parks.

By doing this, they hope to begin bringing some balance to the lopsided jobs-housing mix in the job-scarce Santa Clarita Valley and surrounding areas.

One of the most recent examples of this happened in August, when the Los Angeles County Board of Supervisors approved a zoning change for 195 acres of unincorporated county-owned land near Castaic.

The land, which had previously been zoned for low-density residential development, is now being developed into an office-industrial project called the Golden State Business Park.

The park, which will include mostly light and medium industrial space and some office space, is being developed by a partnership called Castaic Associates.

Another major office-and-industrial-park developer in the Santa Clarita Valley is Newhall Land & Farming Co.

The company's largest park is the 1,532-acre Valencia Industrial Center, which contains about 8.6 million square feet of building space.

Some 500 companies with a total of 11,000 employees are now working out of the center. The project has been expanding by about 1 million square feet a year in recent years, and it still has about 2.4 million square feet to be developed before it is totally built out.

Newhall Land & Farming is now launching its second major office-industrial park nearby, on its 1,523-acre plot at the northwest quadrant of the Golden State (5) and Santa Paula (126) freeways.

The company says it expects to get final county approval for that 12.5 million-square-foot project in October.

Two deals have already been inked at the new park, pending county approval. The U.S. Post Office has agreed to buy 65 acres, where it plans to build a regional mail processing. And developer Gary Hewson is buying a five-acre lot, where he plans to begin building a 650,000-square-foot industrial project in April 1991.

Another major, but more mature, market for office-and-industrial-park development is the South Bay, where booming port-related businesses continue to fuel development.

The dominant South Bay players continue to be Watson Land Co. and Trammell Crow Co.

Trammel Crow alone owns about 9 million square feet of industrial space and 1.5 million square feet of office space on 450 acres in the City of Commerce.

The company's newest major project, The Citadel, is a $118 million mixed-use project that the company is developing on the 35-acre former site of the Assyrian palace-style Uniroyal Tire Plant.

The project, which broke ground last November and is slated for completion in Feb. 1991, calls for 390,000 square feet of office space, 150,000 square feet of retail, a hotel and conference center, a restaurant and food court.

Trammel Crow also completed its 31-acre Vernon Business Park in January of this year, and 70 percent of the project's 678,000 square feet is already leased.

Watson Land Co. is expecting to get approvals by the end of this year to develop a new 400-acre park in Dominguez Hills, to be called Dominguez Technology Center.

The company is expecting to have the infrastructure work completed at this new park by the end of 1991, at which time it will begin offering build-to-suits.

In nearby Carson, Watson Land has been developing the 600-acre Watson Industrial Center South since 1963.

All but 20 acres of that sprawling park has now been developed, and that remaining acreage will most likely be built out soon by existing tenants.

Just across the San Diego (405) Freeway, Watson Land is finishing up its 135-acre Watson Corporate Center. Only about 50 acres remain undeveloped there.

Watson Land finished construction more than a year ago on its 18-acre, 80,000-square-foot Watson I-5 Business Center in Rancho Cucamonga, but has yet to land a tenant there.

Growth ordinance controls in the San Fernando Valley have shifted much of the growth in that area to office parks in Warner Center.

"In the last six months we have had the strongest activity we have ever seen for Voit Cos. projects ever," said Bill Lassetter, vice president and director of marketing for the Voit, which is building about one half of alloted office product in the valley's designated "downtown," Warner Center. He said that Voit Warner Center projects have absorbed 300,000 square feet in the first six months of 1990.

As for leasing rates, the new trend at office and industrial parks seems to be away from offering triple-net leases and toward gross-rate leases, reports Ray Brandt, vice president of sales and marketing for Watson Land.

Gross-rate leases hold the landlord responsible for the cost of taxes and insurance, roof and black-top repair and replacement, and exterior paint.

"Many of the industrial buildings in this market were built in the early 1960s, and things like roofs and paint and black-top are starting to wear out," Brandt says. "To ensure tenants don't get left holding the bag, we began offering gross-rate leases in January, and we've leased more than 1 million square feet since then.

The difference between triple-net lease rates and the slightly higher gross-rate leases vary depending on the market and park. But at South Bay industrial parks, for example, monthly gross lease rates generally range from 41 to 42 cents a square foot; whereas triple-net monthly lease rates are generally between 34 cents and 37 cents a square foot.