Rise in rents, new construction signal desirability of market.

A sharp jump in rents underlined the growing maturity of the Santa Clarita office market in the third quarter.

The North County submarket saw average Class-A rates hit $2.45 per square foot, 13 cents higher than the previous quarter and 14 cents higher than similar space in the west San Fernando Valley, according to Grubb & Ellis Co.

Another indicator of the region's advancement as a desirable office location was the amount of new construction, with 400,000 square feet of spec development expected to come on line over the next two years.

"Demand is high and the fundamentals are strong," said David Solomon, a first vice president with CB Richard Ellis Group Inc. in Sherman Oaks.

Although the supply of Class-A space in Santa Clarita is still relatively small, at 1.7 million square feet, new sites such as Gateway Plaza, at 25350-60 Magic Mountain Parkway, will broaden the submarket's base. Developer Tierney Road Investments plans to deliver two buildings there totaling more than 100,000 square feet next year.

While third quarter vacancies in Santa Clarita jumped to 9.1 percent from 3.4 percent, brokers said the figure was skewed by new space that has come on-line. The first of two, 77,400-square-foot Class-A buildings in Valencia developed by Opus West Corp. opened Sept. 1.

Progressive Casualty Insurance took some of that space at the Opus Corporate Center, 25152 Springfield Court, signing on for 10,720 square feet for five years at $2.50 per square foot.

Other office leasing in the submarket indicated rents have now equaled or are higher than San Fernando Valley hotspots such as Studio City. However, unlike Los Angeles, the submarket is still cheaper because there are no gross receipts, utility or parking taxes in Santa Clarita.

When Newhall Land and Farming Co. first developed Santa Clarita decades ago, demand was mainly from industrial users. Today multi-family condos and office buildings pencil out best for investors.

"All the retail banks, brokerage firms and escrow companies feel they need to have a presence up there," said Solomon. "The housing boom has created a live/work population, much like what happened in Warner Center."

Indeed, real estate and professional service firms continued to pour into North Los Angeles County. Legal investigators Batza & Associates inked 2,168 square feet at Westridge Executive Plaza (26650 The Old Road in Valencia) from A&B Westridge LLC at $2.60 per square foot for five years.

Meanwhile, sales in the Antelope Valley were paced by a $2.9 million deal for the Monte Vista Medical Center at 44439 17th St. W. in Lancaster. Adem Living Trust of La Canada paid $149 per square foot for the nearly 20,000-square-foot building. The seller was a local group, RCC Properties Inc.

On the industrial side, vacancy rates dropped nearly a point to 2.3 percent from 3.2 percent, while overall net absorption jumped to nearly 3.5 million square feet, up more than 670,000 square feet from the same period last year.

Ray Howden, associate director with Cushman & Wakefield Inc. in Woodland Hills, said the industrial sales market has stayed hot across North County because users can still save as much as $30 per square foot over the San Fernando Valley. "It used to be a feeder market for places like Burbank and Pacoima," said Howden, "but now there's real internal growth in Santa Clarita."

Top industrial deals in North Los Angeles included Global Motorsport leasing 64,607 square feet at 28655 Braxton Ave. in Valencia from Borstein Enterprises for three years at 48 cents per square foot.

Top transactions included the sale of a 142,000-square-foot warehouse and distribution center at 25045 Avenue Tibbitts by San Francisco-based Calwest Industrial Holdings LLC. to Dallas-based CLPF-ASP Valencia LP. The price was undisclosed but brokers' estimates were up to $93 per square foot, nearly $20 higher than comparable sales comps for previous quarters.

Major Events:

* Opus West Corp. opened two 77,400-square-foot Class-A buildings in Valencia at its Opus Corporate Center.

* Progressive Casualty Insurance leased 10,720 square feet at the Opus Corporate Center for five years at $2.50 per square foot.

* RCC Properties Inc. sold the nearly 20,000-square-foot Monte Vista Medical Center at 44439 17th St. W. in Lancaster to the Adem Living Trust of La Canada for $149 per square foot.

* Global Motorsport leased 64,607 square feet at 28655 Braxton Ave. in Valencia from Borstein Enterprises for 3 years at 48 cents per square foot.