Video Recap of Bisnow's Los Angeles Future of the Valley

We welcomed 200 to the Sportsmen's Lodge in Studio City, including Douglas Emmett regional manager of leasing David Hitzel. With an Encino-Sherman Oaks portfolio that's almost 95% leased, he says the submarket is on course with what's going on in the Westside. Rents are rising and concessions are being taken off the table amid the influx of media and tech firms. The company's target tenant is the sub-3,000 SF local professional services firm; that said, reality show producer ITB Studios just leased 21k SF in the Sherman Oaks Galleria's Courtyard Building, representing a new user profile in the market. David says Woodland Hills isn't seeing quite the same velocity, but as rents rise in Encino-Sherman Oaks, he expects to see some push out there.

Our tenant rep on the panel, Cresa principal Rick Pearson, says the Valley is lagging behind LA and Orange County. While the East Valley's been able to push up rents, he says you can get almost as good a deal in Woodland Hills as in the past three years. For the first time in quite a while, he's telling clients that now's the time to lock in a good, long-term deal. On the owner-user building sale front, he says people are feeling a little better about business, but they haven't forgotten that things could change in a heartbeat so they're more cautious. Leasing is more nimble. Like Downtown LA, Warner Center has the residential component now and Westfield's adding the retail, but rates aren't where they need to be to build new office.

NAI Capital SVP Cathy Scullin once received a call from someone who needed to lease space in Burbank for two hours. Nowadays, the quality of client is markedly improved. At the same time, she says communities north of the Ventura Boulevard corridor—Van Nuys, Northridge, North Hollywood, Granada Hills—are still lagging. Noting Disney vacated nearly 500k SF in Burbank, she expects to see the now-historic vacancy level draw tenants there. She also points to a plethora of exciting young bars and Westside-style restaurants in Studio City. Despite the high vacancy in Burbank, Cathy notes the profile of available space is primarily 1980s vintage. You have a market that craves creative space, she says.

Cassidy Turley executive managing director Lee Black sees activity focused in the Conejo Valley, which offers larger blocks with large and efficient floorplates, 4:1,000 free surface parking, and no City of LA gross receipts tax. Last year had positive net absorption, and the trend is going in the right direction for 2013, given no new construction. A good sign for the market are a few of Cassidy Turley's recent, larger deals: the Hilton Foundation, 75k SF in three phases; American Homes 4 Rent, 45k SF; Nationwide Medical, which expanded to 38k SF, taking a building that was empty for five years; plus a few purchases by owner-users (UCLA, 50k in Calabasas, and Peak Performance, 45k SF in Calabasas). However, the giants like Amgen are being quiet, and Verizon consolidated.

Lee & Associates-LA North/Ventura principal Mark Leonard says the 10k to 15k SF tenant in the financial, marketing, and insurance fields is driving absorption in the West Valley. Calling Warner Center a suburb that's grown up around insurance-based companies such as Blue Cross and Health Net, he hopes this trend continues because it's definitely not the media district or the Westside—that is, no big influx of social media or Internet companies. While Mark says he's no fan of Obamacare, he thinks it will generate some jobs and office space absorption. On the topic of owner-occupant sales, he expect medical users that are growing and want to control their facilities will make some acquisitions.

CBRE SVP David Solomon points to an abundance of medical-related uses in the Valencia and Santa Clarita markets, such as UCLA Healthcare's purchase of a 35k SF building in Valencia, and Kaiser's purchase of the 120k SF former US Borax HQ. In addition, Newhall Land's former HQ building sold to a medical group. He says in the last nine months, there's been 200k SF of absorption in Valencia. This trend is consistent with LA, where traditional, big companies aren't growing much and a lot of the demand has been from other uses coming in such as Equinox Fitness. Employers take note: When you start to add headcount, the Valley will be a great place to hire from because of its diverse labor base and housing stock from entry-level to executive.