Full pipeline bodes more action after slowdown in first quarter. (Real Estate Quarterly--North County).

FIRST quarter leasing activity in North Los Angeles County slowed from the previous three months, but the market remained healthier than it was a year ago.

In both the commercial and industrial markets, brokers said an active pipeline signals higher activity to come.

"There is not a lot of existing vacancy, combined with a tendency for the first quarter to be slow" said David Solomon, vice president at CB Richard Ellis.

Office vacancy rates in the Santa Clarita Valley rose slightly, to 14.3 percent in the first quarter from 13.8 percent in the fourth quarter of 2002, according to Grubb & Ellis Co. In the first quarter of 2002, vacancies were at 165 percent.

Meanwhile, net absorption (space leased minus new space coming on the market) was slightly positive at 1,660 square feet in the first quarter, compared with the 34,175 square feet of net absorption in fourth quarter 2002.

Much of the vacant space available can be found at the Summit at Valencia, said Solomon, who expects that as the park leases up vacancy rates will fall even lower.

Parker Hansen and Pacific Coast Capital Partners LLC purchased 180,000 square feet of office space from General American Life Insurance Co. at the Summit at Valencia. The space consisted of three 60,000 square foot buildings, each with two stories. Beazer Homes also signed a lease in the business park for 7,000 square feet.

More office space is in the works, with Westridge Executive Plaza breaking ground in the first quarter on a 60,000 square foot project at Old Road and Valencia Boulevard, just west of Interstate 5. Roughly 50 percent of the project is pre-leased and slated to open in the third quarter of this year, Solomon said.

Opus West Corp. and Newhall Land & Farming Co. will also be adding to the stock, having formed an alliance to develop 40 acres across three sites in Valencia. The development is still in the planning stages, with the land being readied for the projected summer construction start date.

Industrial activity also slipped during the first quarter from the previous three months, despite a lower vacancy rate.

Total industrial sales and leasing volume fell sequentially to 239,812 square feet in the first quarter from 357,290 square feet in the fourth. Vacancy rates fell to 10 percent from 13 percent levels in both the preceding and year-ago periods.

"There wasn't a tremendous amount of large closings, although activity in negotiations would indicate that sales and leasing in the second and third quarters will increase dramatically," said Jim Linn, senior vice president at Grubb & Ellis.

Of the deals completed, leasing accounted for 157,743 square feet while sales were at 82,069 square feet, according to Melissa Ertek, market analyst for the region at Grubb & Ellis.

The larger deals included Creative Graphic Services purchasing 21,055 square feet in the Center Pointe Business Park from Fairway Commercial Partners, said Linn.

Development group Pacific Southwest LLC closed escrow on two land parcels at Rye Canyon Business Park totaling 19 acres. The first phase will include three buildings, which will offer technology/industrial condominiums for sale or lease of 2,500 square feet and larger.

There were two building transactions completed at Commerce Pointe, a 27-acre business park at Interstate 5 and Highway 126. Fuji Medical Center purchased a 15,000 square foot building and Valencia Sports Group purchased an 11,000 square foot building.

Valencia Commerce Center also saw some activity, with TAS America leasing 17,305 square feet and SCV Plumbing Inc. leasing 16,101 square feet, Linn said.

There were only modest price movements in Santa Clarita Valley rental rates. Class-A office rental rates in the first quarter were $1.97 per square foot, compared to $1.89 per square foot in the fourth quarter 2002 and $1.94 per square foot the year earlier, according to Grubb & Ellis.

Asking rates for industrial space in the first quarter were down 2 cents from the previous three months at 57 cents per foot, which was the same price recorded in first quarter 2002.

RELATED ARTICLE: Major Events:

* Parker Hansen and Pacific Coast Capital Partners LLC purchased 180,000 square feet at the Summit at Valencia.

* Opus West Corp. and Newhall Land & Farming Co. formed an alliance to develop 40 acres across three sites in Valencia.

* Pacific Southwest LLC closed on two land parcels at Rye Canyon Business Park totaling 19 acres.

* Fuji Medical Center purchased 15,000 square feet and Valencia Sports Group purchased 11,000 square feet at Commerce Pointe.

* TAS America leased 17,305 square feet and SCV Plumbing Inc. leased 16,101 square feet at Valencia Commerce Center.

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