Decline of Industry Gives Valley Room to Grow

When Litton Industries sells a 17-acre office campus in Agoura Hills that it’s now marketing to prospective buyers, it will mark the latest example of a phenomenon that would have seemed unlikely in the heyday of San Fernando Valley’s aerospace industry.

Throughout the San Fernando and Santa Clarita valleys, 1,000 acres or more of former aerospace property has been converted, or soon will be, to other uses--primarily offices, warehouses and retail stores.

Without the aerospace windfall, real estate developers would be hard-pressed to find such large parcels of land for development.

Among the biggest former aerospace holdings now used for other purposes are a 377-acre former Lockheed research facility on Rye Canyon Road in Santa Clarita, Lockheed’s 300-acre former facility in Burbank, and the 86-acre former Hughes Aircraft Co. research and development site in West Hills.

These conversions, including many smaller sites now occupied by shopping centers or individual retail stores, represent a mixed bag for the Valley’s economy.

The continuing conversion of so much former aerospace property is a reminder of the defense industry downsizing that dealt a body blow to Southern California’s economy and contributed to one of the region’s worst recessions.

In one respect, the conversions bring new life and new jobs to empty facilities, many of which sat vacant for years.

On the other hand, those jobs often pay considerably less than aerospace wages, especially if they are retail sales positions, said Saul Gomez, regional economic development manager for the San Fernando Valley Economic Alliance.

“We’re always better off if we can keep the aerospace jobs,” Gomez said.

But not all of the jobs at converted facilities are low-paying, Gomez noted. The office and professional jobs in many of the converted facilities pay fairly well, and some jobs are even in high-paying industries such as biomedical manufacturing--such as Advanced Bionics, which has leased space at Rye Canyon.

Former aerospace property provided much of the space for the growth of the Valley’s entertainment industry in the latter part of the 1990s, noted Brad Koehler, a Trammell Crow broker who was involved in many Lockheed land sales when he was a Colliers Seeley broker.

“Most of the former Lockheed properties in the East Valley have gone toward entertainment uses, like Warner Bros., Disney and others,” Koehler said. “Some of it was renovated, but a lot of it was razed because it was old warehouses that dated from the 1940s or even earlier.”

The company, now known as Lockheed Martin, has sold all but one parcel of the 300-plus acres that the company owned in Burbank, company spokeswoman Gail Rymer said.

Los Angeles-based Zelman Development Co. is in escrow to buy the remaining Lockheed parcel, a 103-acre site on which Zelman plans to build the Empire Center, a 750,000-square-foot super mall with 450,000 square feet of office space, two hotels and a car dealership.

Some of the former aerospace facilities present unusual challenges for builders, according to Koehler.

Developer M. David Paul had to figure out what to do with windows at a former Lockheed building in Burbank that, for security purposes, were only 16 inches wide.

Paul’s solution was to strip away the building’s exterior, widen the windows, and create a modern office building that was quickly leased to Disney Co, Koehler said.

Developers often have to gut former aerospace offices, said Mark Ossola, a senior vice president at Trammell Crow’s development division, which is active in converting former Valley aerospace facilities.

“The aerospace companies tended to prefer lots of individual, private offices, but tenants today prefer a more open office design,” Ossola said.

Developers often have to replace heating, air conditioning and elevators at older aerospace buildings, as Trammell Crow did in renovating 325,000 square feet of office space at the former Hughes operation now known as West Hills Corporate Center, Ossola said.

He said Trammell Crow was lucky in that it didn’t have to retrofit the offices for modern earthquake safety standards--as is often the case in renovations--because a former temporary occupant, Coast Federal Savings, had already done that work.

The developer is also building 50,000 square feet of new space, due to be completed early next year, and has room for 125,000 square feet of additional office space if it can obtain government approvals, Ossola said.

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The 86-acre Hughes site was sold in pieces--five acres to the Los Angeles Police Department for a dispatching station, 20 acres to DeVry Institute for a technical school, and the remaining 61 acres split evenly between Trammell Crow and the other developer of West Hills, a partnership of Beverly Hills-based Regent Properties and Burbank-based Shamrock Holdings.

The Regent portion of the project, which is fully leased, includes 420,000 square feet of former Hughes space that was renovated and 140,000 square feet of new space, according to Jeffrey Dinkin, managing partner at Regent Properties, who cited the roles of Los Angeles’ Business Team and the Valley Job Recovery Corp., which was created to restore jobs lost to aerospace cutbacks.

Trammell Crow spent about $14 million renovating its portion of the project, said Ossola, who said the 1960s-era buildings required extensive retrofitting of ventilation equipment, elevators and other basic elements.

Other former aerospace properties that Trammell Crow has acquired include a former Skunk Works building on North Hollywood Way in Burbank. There it is constructing a three-story, 160,000-square-foot speculative office building due to be finished in mid-2001, according to Scott Crawshaw, a Trammell Crow broker.

At a 29-acre site--formerly occupied by rocket engine manufacturer Marquardt Co.--west of Saticoy Street and Hayvenhurst Avenue in Van Nuys, the company has renovated and leased 200,000 square feet of existing industrial space and is building 500,000 square feet of new space in five buildings. The $42-million project is scheduled for completion in the first quarter of 2001, Ossola said.

Not all aerospace firms in the Valley have engaged in wholesale land sales.

Boeing’s Rocketdyne division, one of the largest remaining aerospace firms in the Valley, with 5,000 workers at four locations, has divested itself of only two relatively small parcels, according to Dan Beck, a Rocketdyne spokesman.

One site is now a shopping center at the northeast corner of Victory Boulevard and Canoga Avenue; the other is occupied by a Best Buy retail store in Woodland Hills.

While much of the aerospace downsizing and consolidating occurred years ago, Litton’s recent consolidation of two divisions into one facility in Northridge will leave 162,000 square feet of office space empty on a 17-acre site on Agoura Hills Road near Reyes Road.

Litton spokesman Randy Belote said the company sold two other properties--a 16-acre site on Strathern Street in Van Nuys that the Lewis Co. converted into an industrial park, and 16 acres on Condor Drive in Moorpark that is now occupied by Card Services, a credit card service company.

Ossola of Trammell Crow, who has toured the Litton building in Agoura Hills, said his company is one of many developers and prospective owners who are interested in acquiring the property, which is newer than many other aerospace facilities because it was built in the 1980s and is “in a very desirable location in the 101 Technology Corridor.”