Tenants add space while rents could still grow.

Institutional investors looked to exploit maturing fundamentals in the Santa Clarita office market, while large corporate tenants added even more space to their coffers.

To whit, Cornerstone Real Estate Advisors, which manages more than $800 million in real estate securities, paid upwards of $300 per square foot for the Commons at Valencia Gateway, formerly known as Opus Corporate Center.

On the leasing side, Princess Cruises cemented its spot as the area's most prominent corporate tenant, expanding into one-half of the newly built Gateway Plaza in Valencia.

What's fueling the market swagger in Santa Clarita?

Year-to-date absorption capped out at more than 115,000 square feet, l0 times as much as 2005, according to figures provided by Grubb & Ellis Co. And while Class A asking rents fell a quarter to $2.56 per foot, brokers said land lords were asking 20 to 30 cents higher than that number for brand new office product.

Valencia rents in the $2.50-per-foot range mirror prime San Fernando Valley sectors, and firms don't have to pay the high Valley parking lees or City of L.A. taxes.

"The big national investors are clearly seeing room for rent growth in this market," said David Solomon, First Vice President with CB Richard Ellis Group Inc. in Universal City. "They like the broad tenant base and consistently low vacancies. Rents pretty much have to rise to support what we've seen being paid to build new product."

Office Market At a Glance

Inventory: 1.9 million square feet

Under Construction: 290,000 square feet

Class A Asking Rents: $2.56

MAIN EVENTS

* Princess Cruises signed on for 50,000 square feet of new Class A space at Gateway Plaza, 25360 Magic Mountain Parkway in Valencia, giving the company roughly 350,000 square feet in the submarket, once the lease commences in mid-2007. The five-year deal was with local developer Tourney Road Investments.

* Opus West, which closed escrow on the land for Opus Corporate Center in the first quarter of 2005, sold both three-story buildings to Cornerstone Real Estate Advisors for $46.2 million. The site has been re-branded the Commons at Valencia Gateway.

* LNR Property Corporation closed escrow on Entrada I, a 9-acre project at the northwest corner of Magic Mountain Parkway and the Old Road. The two four-story buildings are targeted for a May 2008 completion. Lennar Homes and Newhall Land will occupy one of the buildings.

* The 40,000 square foot Castaic Town Center, at 27900 Sloan Canyon Road in the northwest Santa Clarita Valley, was sold for $15.4 million to Triple Net Properties LLC. The Santa Ana-based investment group purchased the 11-acre site.

* Valencia-based Mechanix Wear, which manufacturers gloves used by NASCAR drivers, broke ground on a 75,000-square-foot parcel that will be the firm's new headquarters. The $11 million build-to-suit office-industrial complex will occupy a site at 28525 Witherspoon Parkway.

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