Strauss pays $204 a foot for Valencia office, buying the lease-up

Harbor Associates sold Commons at Valencia to San Diego-based Strauss Investments for $32 million, or about $204 a square foot across the two-building campus's 157,189 square feet; the print lands within a dollar a foot of the Brea office building covered on Sept. 16, where a 30-day sale cleared at $205 a foot with the property 29.5 percent empty.

The campus occupies nearly 9 acres at 25124 and 25152 Springfield Court, just off Interstate 5 in the Santa Clarita Valley, with two three-story buildings and a two-story parking structure holding 625 spaces. Built in 2005 and renovated extensively by Harbor in 2020, it is now 79 percent leased to tenants in professional services, insurance, financial services and real estate. CBRE represented the seller, with Mark Shaffer, Anthony DeLorenzo, Sean Sullivan and Gerard Poutier handling the assignment.

Shaffer, a CBRE senior vice president, said in a statement that the campus drew significant investor interest on the strength of its tenant roster, recent capital improvements and location; the brokerage calls Valencia one of the stronger-performing office submarkets in north L.A. County on residential and employment growth. CBRE's deal sheet now has 60 entries, the latest an $800 million sale announced Sept. 24.

Two prints nine days apart, both in the low $200s a foot, suggest the market is not paying suburban Southern California office for occupancy or for renovation spend. Renovation spending proved its worth at 1411 Broadway in Midtown, where a $100 million program produced more than 182,000 square feet of leases and a path to 90 percent occupancy. Harbor finished its renovation five years before the sale and still handed over a campus with a fifth of its space unleased, which puts the eventual premium, if there is one, in the buyer's column rather than the seller's.

The trade Strauss is underwriting is about 33,000 square feet of empty space at whatever rents Valencia will bear, bought at a per-foot price the market set on emptier buildings. For Harbor, a $204 print on product it renovated in 2020 is a clean resolution of the value-add case rather than a discounted one, and a better outcome than holding out for a trophy bid a 2005-vintage suburban campus was unlikely to draw. The coverage does not disclose a cap rate or the financing, which leaves the per-foot number as the only measure anyone has put on the record. Springfield Court's next few signings will decide whether $204 a foot reads as an entry point or as the going rate for a rent roll with a hole in it.