A glut of office space now exists in local areas

Acorn Staff Writer


Conejo Valley-Las Virgenes still prides itself as the new "Silicon Valley" of Southern California, but recent real estate figures indicate the area’s office market isn’t as robust as it used to be.


The Conejo Valley welcomed more than 1 million square feet of new office space in 2001, according to commercial real estate figures, but many of those upstart buildings are still searching for tenants.


Judging by vacancies—a barometer of real estate health—the office market in Lost Hills, Agoura Hills, Westlake Village and Thousand Oaks has dropped considerably over the past year.


The 101 Freeway business corridor includes a 20-mile stretch of technology, biotechnology, research and development and health-related firms—all of them requiring office space or light manufacturing facilities in which to operate.


Local office vacancies increased to 12.6 percent in the fourth quarter of 2001, up from 9.7 percent in the third quarter, according to brokerage firm CB Richard Ellis. For the full year, office vacancies in East Ventura County almost doubled as a host of new reflective glass and concrete buildings came into use.


"The market right now is very flat. There’s not a lot of absorption happening," said Keith Greene, executive vice president of Daum Commercial Real Estate Services.


In the fourth quarter, just 10,400 square feet of local office space was "absorbed" compared to a whopping 236,600 square feet in the third quarter.


Only about 250,000 square feet of new space is expected to be added in 2002.


Two years ago, developer Moshe Silagi began the burst of office construction in Agoura Hills and found that he couldn’t build his buildings fast enough. Now it’s much easier to lease his offices in Oxnard and Ventura than it is locally, he said.


"I find the Oxnard plain to be more active at the moment than the Conejo Valley Silicon 101 because the Oxnard plain was not affected by all those high tech companies," Silagi said.


The Thousand Oaks developer opened the 94,000 square-foot Canwood Corporate Center in 2000, the first new offices in Agoura Hills in 10 years. Silagi plans to add a 23,000 square-foot building on the same site this fall.


Silagi said his "class-A" buildings would always be in demand because of location and their quality of construction. His vacancy rate on Canwood Street is 15 percent, however.


"I was strictly opposed to, but it turns out they’ve been pretty good neighbors," said Hillrise resident Jack Hines.


But Silagi is more concerned about filling his office space than winning the approval of residents. His 90,000 square-foot Agoura Gateway office on Roadside Drive facing the 101 Freeway will be completed in May, but so far, there are no leases. And although he has the city’s permission to build yet another new office next to the Agoura Medical Plaza on Canwood Street, he’s beginning to have second thoughts.


"I will be a little hesitant to see what’s happening because there’s too much inventory on the market at the same time," Silagi said.


Over the past three years, Agoura Hills saw 17 office buildings either completed or put into the planning stages. Unlike Calabasas, in which many of the recent offices were built for specific tenants, the Agoura Hills offices are more speculative.


Los Angeles developer Jerry Katell is about to open a 67,000 square-foot office on Agoura Road, while Westlake’s Ed Ball is building a four-acre office complex called Centerpointe near the new Agoura Hills City Hall.


"It’s been pretty active ever since 1999," said Mike Kamino, planning director of Agoura Hills.


Offices are being added north of the 101 Freeway as well.


The industrial buildings under construction on Derry Avenue in Agoura Hills include office space, as does the 30-acre Riverwalk development that’s proposed for the northeast corner of Kanan Road and Canwood Street.


Jerry Snyder, a major Los Angeles developer, originally planned 400,000 square feet of office space where Denny’s Restaurant is located, but said he changed his mind when he saw the demand for new space drop in conjunction with the falling technology sector. His new plans call for a mixed use of apartments, restaurants and only 95,000 square feet of office.


Conejo office developers continue to bank on a desire by Los Angeles firms to escape the older buildings and crowded working conditions of downtown, but while the current market is slow, they see leasing activity picking up in the second half of this year.


Tom Dwyer, CB Richard Ellis first vice president, expects the 110,500 square-foot Kilroy office building in Calabasas to be fully leased by the end of this quarter. Located next to the popular Commons shopping center, the structure was only 53 percent occupied at the end of last year.


Dwyer also said the recently built Westlake Plaza III office building would be mostly leased by this summer. The new IDS office next to Costco in Westlake Village has been only about half full, but expects to be occupied as well.





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