The 68-acre Phase I has 800,000 sf of industrial space and 368,200 sf of retail. The 15-acre Phase II will have less than 30,000 sf of retail and 535,000 sf of industrial. Voit and development partner Selleck Development Group of Westlake Village, CA also own an additional 11 undeveloped acres adjacent to the project.
Voit completed the first phase on spec in 2000 and quickly sold the project's five industrial buildings to owner-users. Tim Regan, Voit's vice president for development and acquisitions, says the company didn't intend to sell the properties. "We would have loved to build them and hold them, but that's the way the market responded," he says. The retail portion leased to tenants including the Babies "R" Us division of Toys "R" Us Inc., OfficeMax Inc., Ross Stores Inc., Mann Theaters Inc. and Hometown Buffet Inc. The Home Depot Inc. and In-N-Out Burgers Inc. bought pads for development of their own stores. Voit subsequently sold the retail center.
Although retail historically has not been considered complimentary to industrial, Regan says the two uses fit together well. The retail center is at the front of the site along Van Nuys Boulevard, the community's main thoroughfare. The industrial portion is in the rear, with primary access from less congested streets. In any case, Regan says, the city gave no option but to include both uses. The property housed a Chevrolet assembly plant until it was shuttered by General Motors Corp. in 1998. City officials wanted a project that would replace some of the blue-collar jobs lost by the closing. But it also wanted to upgrade that portion of Van Nuys Boulevard, which had become a center for drugs and crime. Dividing the site into retail and industrial parcels seemed the best option. The joint venture partners split the work based on their backgrounds, with Voit handling the industrial segment and Selleck handling the retail.
Regan calls the linking of retail with industrial an "absolute benefit" because the higher retail rents make the project more lucrative. In this case, it also increased the general value of the property because it acted as a catalyst for the surrounding commercial district and made it easier to attract industrial users by making the area safer. "We would have liked a little more retail because it would have created higher value, but the city wouldn't allow it," Regan says. Sachse Real Estate Co. of Beverly Hills has small shop space at the center for $2.75 per sf per month. By contrast, one of the Phase I industrial buildings is now leasing for $0.69 per sf.
The new phase is being built on a portion of the Chevrolet site that GM continued to use as an emissions testing center until 2004. Voit and Selleck are retaining the existing 220,000-sf building and have two build-to-suits totaling 300,000 sf in construction for a wholesale distributor and a bedding manufacturer. Both are expanding from buildings they bought in Phase I. There is also a 17,000-sf spec industrial building and 16,000-sf spec retail building under construction.
Regan won't disclose details of the build-to-suit deals, but he says newer industrial buildings in the surrounding submarket are selling for $125 to $200 per sf, depending on size and amenities. Industrial land is selling for $20 to $25 per sf, up from $15 to $18 per sf just three years ago. The high costs and scarcity of sites, Regan adds, make mixed-use a pragmatic solution for locations throughout Southern California because it opens up properties that might otherwise would be unavailable because of regulations or costs.
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