MARKET FOR VALLEY BUILDINGS ON A ROLL; DEALS STRUCK TO BUILD IN SYLMAR, VAN NUYS.

Byline: Gregory J. Wilcox Staff Writer

The San Fernando Valley's commercial real estate market is still a good place for speculation.

Developers have struck deals to build more than 800,000 square feet of space in Sylmar and Van Nuys, on two of the last big chunks of land available in the Valley for such projects. They are going forward without having tenants lined up, yet are not concerned about leasing out the space once the buildings are complete.

And Sylmar-based Hewson Co. is a big player in both deals.

The activity comes even as the vacancy rate for this type of property jumped to 5.5 percent in the 1999 second quarter from 3.5 percent in the like period a year ago.

Alex Rietmann, research analyst at the Grubb & Ellis office in Sherman Oaks, attributed the spike to companies moving into newer facilities built in the Conejo and Santa Clarita valleys.

Still the market remains tight.

``That's about as low as it gets,'' he said of the current vacancy rate.

So there is still good demand for projects like the ones Hewson is involved with.

One is a major expansion of an existing business park and the other a makeover of a former aerospace manufacturing facility.

Hewson hopes to start construction early next year on a three-building complex of 364,000 square feet on 19 acres at the Cascades Business Park, near the intersection of the Golden State and Foothill freeways.

The buildings will cover 58,000, 106,000 and 200,000 square feet, respectively, and be suitable for a variety of projects, from distribution centers to research and development facilities, said Scott Sheridan, Hewson's vice president.

The project is valued at about $25 million.

Current tenants at Cascades are Sears Roebuck & Co., MS Aerospace and Frito Lay. The county of Los Angeles also is building an assessor's office there.

Hewson will oversee construction and the company's equity partner is Prudential Real Estate Investors, based in Century City.

Hewson also will develop the 56-acre Marquardt Co. site near Saticoy Street and Hayvenhurst Avenue in Van Nuys. Marquardt, which used to make cluster bombs and space-shuttle propulsion systems, closed in 1993.

Both are considered in-fill projects, although the Cascades site is the more virgin of the two properties. It abuts a housing tract and the Santa Susana Mountains. The Marquardt site is near Van Nuys Airport and some of the buildings had been used as soundstages by entertainment companies.

``Sophisticated institutional investors understand market conditions in the San Fernando Valley, and they are hard-pressed to find quality properties like this,'' Sheridan said.

Hewson hopes to start construction by February or March on five buildings - totaling 470,000 square feet - on 24 of the 56 acres at the Marquardt site.

Its equity partner on this project is Boston-based Cabot Industrial Trust.