San Fernando Valley Business Journal

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SAN FERNANDOVALLEY BUSINESS JOURNAL
LOS ANGELES • GLENDALE • SANTA CLARITA • BURBANK • CONEJO VALLEY • SIMI VALLEY • SAN FERNANDO • CALABASAS • AGOURA HILLS • ANTELOPE VALLEY
THE
Volume 18, Number 22
Up Front
COMMUNITY
OF
BUSINESS
October 28 - November 10, 2013 • $4.00
TM
Pet Food Firm
Shedding Plant
PUMPED UP?
MANUFACTURING: Natural Balance
moving operations to Georgia.
By ELLIOT GOLAN Staff Reporter
A Sun Valley
prop house
has tricks up
its sleeve.
PAGE 4
PHOTO BY DAVID SPRAGUE
News &
Analysis
Santa Clarita field could be sold, expanded
By JOEL RUSSELL Staff Writer
ACQUISITION: Private equity firm
PAGE 5
List
P
etroleum has steadily pumped out of
Placerita Canyon for more than 100 years.
Now, production could ramp up if it is
acquired by a spinoff of Linn Energy LLC, a
Houston firm that specializes in getting maximum
oil out of old wells.
The field, west of the Antelope Valley (14)
Freeway in Santa Clarita, has between 350 and 400
active wells. Currently it is owned by Berry
Petroleum Co., a Denver outfit that also owns fields
in the San Joaquin Valley, Colorado, Texas and Utah.
In February, Linn Co. LLC, a publicly traded
spinoff of Linn Energy, agreed to buy Berry in a
stock swap worth $2.5 billion, plus the assumption of $1.8 billion in debt.
A major element of Linn’s business model is
to buy old oil fields and find new ways to get
more oil from them. Common techniques include
infill drilling, where the operator finds pools of oil
that previous drill bits missed.
Another technology is steam flooding and
cyclic steaming, techniques used extensively by
Berry at Placerita Canyon.
Ethan Bellamy, an analyst with brokerage
Robert W. Baird & Co. in Denver, said Linn is
interested in Berry’s California oil fields where
they will try to boost production.
“Their ideal dollar spent is to squeeze more oil
out of a well they already own,” Bellamy said. “But
they spend money any way you can imagine in the
oil patch, except drilling highly speculative wells.”
But Linn’s takeover of Berry’s assets, including
bulks up Organized SportsWear.
By MARK R. MADLER Staff Reporter
Organized SportsWear, a Chatsworth company that is one of the largest suppliers of school
gym uniforms in the western United States, has
been bought by an area private equity firm in its
first acquisition.
CriticalPoint Capital, in El Segundo, closed on
its deal with Rick and Karen Johnson, founders of
Organized SportsWear, at the end of September.
Financial terms of the deal were not disclosed.
“We had gotten to the point where we were
looking at (financial) security and not willing to
Please see ENERGY Page 48
Please see ACQUISITION Page 6
Biggest private
aviation firms
PAGE 8
Comment
VICA lauds the
moderation
taking hold in
Sacramento.
PAGE 52
SPECIAL REPORT REAL ESTATE QUARTERLY
LOFTY LIVING
Want to live in a cool loft? Maybe ride your bike or
catch a train to work? Until recently most of your
options were limited to downtown and the Westside.
But a new wave of urban-style multifamily projects
is underway in the greater Valley, such as the Metro
Art Sherman Oaks by developer GREG BRODY, right.
There is some resistance from longtime homeowners,
but it looks like the developments are here to stay.
PHOTO BY DAVID SPRAGUE
l
Please see MANUFACTURING Page 49
No Sweat for
Clothes Maker
Strike: Pumps work Placerita Canyon oil field west of the Antelope Valley (14) Freeway.
Wrap a ribbon
around this
Burbank firm’s
hardware.
Natural Balance Pet Foods Inc. is closing its
Pacoima manufacturing operations to move them
out of state now that the company has been
acquired by Del Monte Corp.
The pet food maker filed a notice with the state
Employee Development Department earlier this
month that disclosed the closure of its operations at
12224 Montague St., where 92 employees will lose
their jobs when the move is complete Dec. 31.
The company’s nearby corporate headquarters
and distribution center are remaining and are not
affected by layoffs, said Chrissy Trampedach, a
BEGINNING ON PAGE 15
Nomination Deadline: Friday, November 1, 2013
Award Categories: Public Company • Private Company
Nonprofit Company • Rising Star • Government/Municipal/Public Sector
For more information, see our ad on
page 44 or visit www.sfvbj.com/bizevents
SPECIAL REPORT
REAL ESTATE QUARTERLY
Wow Factor: Developer
Greg Brody in a loft at his
Metro Art Sherman Oaks,
a pricey 113-unit apartment complex that
features retail frontage
along Ventura Boulevard.
LOFTY LIVING
A new wave of urbanstyle apartments
that cater to young
professionals is going up.
The trend doesn’t
please everyone.
By ELLIOTT GOLAN
Staff Reporter
W
hen Greg Brody first started building
urban-style multifamily buildings in 1990,
it was on a small scale.
That first project was 30 units, with
about 7,000 square-feet of retail and 2,000
square-feet of office space at Van Nuys
Boulevard and Dickens Street in Sherman
Oaks.
Fast forward almost 25 years, and that first project almost
seems quaint.
This summer, the Sherman Oaks developer and his BW Brody
Affiliated Cos. finished Metro Art Sherman Oaks, a 113-unit
development with 16,500 square-feet of retail frontage on a busy
stretch of Ventura Boulevard east of Van Nuys Boulevard.
Then there are rental prices, which start around $1,800 a month
for a loft and run about $3,000 for a two bedroom – more than
many pay for their mortgages.
“Let’s face it, professionals are generally who can afford
these rents,” said Brody. “While they’re not extremely expensive
by L.A. standards, they’re definitely higher by Valley standards.”
Pricey but apparently there is a market for them.
The developer bought the parcel for his project from Bank of
America Corp. for $6.3 million in 2009, but the move looks
like it will pay off. The development is already more than 80
percent leased since opening in June. Perhaps it’s the Metro
Orange Line bus way within walking distance, the Ralph’s grocery next door, or the Island’s restaurant and Mendocino Farms
sandwich shop on site.
In short, the trendy mixed-used multifamily projects that have
popped up on the Westside have arrived for real in the Valley. And
like their counterparts elsewhere, the developments tend to be
located in busy districts and near mass transit, where younger residents might ditch their cars, hop on bike or catch a train or bus.
Sherman Oaks is an ideal Valley neighborhood for these
developments, with plenty of office and retail nearby, but across
the region there are examples, from the Talaria at Burbank and
Please see page 16
Also
in this
section
Map: Six new
multifamily
projects.
PAGE 19
Chart:
Quarterly real
estate data.
PAGE 21
Submarkets: Valley
neighborhoods by
the numbers.
PAGE 22
➼
PHOTO BY DAVID SPRAGUE
San Fernando Valley Business Journal • October 28, 2013
16 SAN FERNANDO VALLEY BUSINESS JOURNAL
OCTOBER 28, 2013
SPECIAL REPORT REAL ESTATE QUARTERLY
‘Professionals are generally
who can afford these rents.
While they’re not extremely
expensive by L.A. standards,
they’re definitely higher by
Valley standards.’
Continued from page 15
the Citi Live/Work Community in Glendale to
Cielo at Villa Metro in the Santa Clarita
Valley.
But the arrival of this new type of development hasn’t come without conflict.
From city officials often hesitant to
approve zoning changes and variances to
nearby residents fearful over potential
increases in traffic and noise, it’s often a battle to win approval. One project, Il Villaggio
Toscano in Sherman Oaks, only got the green
light a few months ago – after a 10-year feud
with local homeowner associations.
Commercial broker Matthew May, president of May Realty Advisors in Los
Angeles, who has worked on urban development projects for more than 20 years, said
there is little doubt in his mind that the wave
of projects is noteworthy.
“The Valley really has come of its own,”
he said. “The momentum is changing, including the overall perception of the Valley.”
Urban living
The argument in favor of these projects is
simple: People can live, work and play in a
neighborhood, limiting traffic and the money
spent on gas. And for those that still need to
commute, many of the projects sit near public
transportation and could make a car less integral to city life.
Take the $150 million Talaria at Burbank
project.
The 241-unit development was recently
proposed by longtime Burbank developer
Michael Cusumano and his Cusumano Real
Estate Group for the city’s busy Media
District. The five-story, 385,000-square-foot
project at 3401 W. Olive Ave. will feature a
mix of one-, two- and three-bedroom units, in
GREG BRODY,
BW Brody Affiliated Cos.
PHOTO BY DAVID SPRAGUE
addition to a 43,000-square-foot Whole Foods
Market Inc. grocery on the bottom floor.
The 3.8-acre site is in the center of the
Media District, with Warner Music Group
directly across the street. Not far away are
Burbank Studios (formerly NBC Studios),
Warner Bros. Studio and the headquarters of
Walt Disney Co.
“We think it will work really well. In our
downtown, we have people who live, work, eat
and shop all nearby,” said Joy Forbes, community development director for the city, who
said the project also offers the city financial
advantages in tax revenue. “There are strong
economic development possibilities too.”
Adam Christofferson, first vice president
and regional manager at the Encino office of
Marcus & Millichap Inc., said all multifamily development is hot right now, with vacancy
rates in the Valley at record lows – about 3
percent – and rising home prices that make
buying increasingly difficult.
And the luxury amenities these projects
can offer make them attractive to young pro-
Posh: The exterior of Metro Art Sherman
Oaks, which opened this summer and is
more than 80 percent leased.
fessionals with busy schedules.
“Part of the renter profile out there likes
the idea of having amenities right at their feet,
having a sandwich and dropping off dry
cleaning on site,” said Christofferson. “At
some level, it’s the filling in of the gap in the
marketplace as well.”
The effort to build the projects can be brutal, though. Last decade, a larger plan with
even more units forced the original developer,
Platt Cos., into bankruptcy. Cusumano later
picked up the property for an undisclosed sum.
In Sherman Oaks, developer M. David
Paul Associates of Santa Monica is still fighting a decade-old battle over its $130 million
Il Villaggio Toscano.
The 325-unit, 605,000-square-foot project
received L.A. City Council approval in August.
It’s on Sepulveda Boulevard near Camarillo
Street – a few feet from the Ventura (101) and
San Diego (405) freeways interchange.
Toscano features 52,000 square-feet of
retail that the developer hopes to fill up with a
specialty grocer, a four-story parking garage,
two levels of which are underground, with
more than 1,000 spaces. And the building is
walking distance from about 6.5 million
square-feet of office space, making it ideal for
those interested in the walkable urban lifestyle.
But even though the city has given the goahead, M. David Paul Development Manager
Paul Krueger is still not celebrating.
“I haven’t taken a moment yet to go out
and have cocktails and enjoy this,” he said.
“I’m thankful for getting this far in the
process, but nothing is over till it’s over.”
Community pushback
Krueger won’t celebrate because he knows
city approval isn’t the final step. Community
members that have been fighting the project all
along have yet to surrender.
“Litigation is always a possibility and we’re
looking into it,” said Marshall Long, chair of
the planning and land use committee of the
Sherman Oaks Homeowners Association.
Please see page 18
18 SAN FERNANDO VALLEY BUSINESS JOURNAL
OCTOBER 28, 2013
SPECIAL REPORT REAL ESTATE QUARTERLY
‘We think (Talaria at
Burbank) will work really
well. In our downtown, we
have people who live,
work, eat and shop all
nearby. There are strong
economic development
possibilities too.’
Continued from page 16
Long cites a number of problems his
group sees with the project, from the potentially large increase in traffic in an already
congested area, to the noise neighbors will
have to bear, to even the pollution Toscano
renters could be exposed to from living so
close to the freeway.
And Gerald Silver, president of the
Encino Homeowners Association, which also
abhors the project, said it will fail to provide
what it promises.
“The reality is that people will move into
an apartment and then get a job at the place
with the best pay and opportunity. Being able
to walk to work is forgivable for a better job,”
he said. “If developers are building a high-density place, there should be requirements that
tenants work nearby or the whole point is lost.”
Still, the developer calls the battle “unfortunate,” stating that his firm took all the necessary time to educate the public on the benefits of the project and even altered it to
appease the local community. The initial
Toscano proposal was eight stories tall and
had 500 units, 35 percent more than the
approved plan.
“Some people are always going to have a
natural desire to complain about change,” said
Krueger, the developer. “But it’s what development is about: change.”
In contrast, pushback has been minor for
some projects in more suburban, bedroom
communities.
Rick Bianchi, vice president at Aliso
Viejo-based New Home Co., is working on
two such projects: the 220,468 square-foot,
$50 million luxury condominium Village at
Calabasas complex, mere steps from the
Commons at Calabasas; and the Cielo at Villa
Metro, a 22-unit live-work project attached to
a larger, almost $70 million single-family
JOY FORBES, City of Burbank
Old Town: Dimples, a karaoke bar, is
now on the site of the proposed $150
million, 241-unit Talaria at Burbank.
PHOTO BY DAVID SPRAGUE
home development in Valencia.
Cielo is next to the Santa Clarita
Metrolink station making it a more urban
option for suburbanites who commute.
Both projects have received approval from
their respective cities, with Cielo already open
for initial sales. And while Valencia is known
for its wealth of raw land for housing tracts, it
isn’t so simple in Calabasas. The Village will
require tearing down the more-than-40-yearold Calabasas Inn.
“People have been very supportive of these
projects,” said Bianchi. “And while it’s a new
concept for the city of Calabasas, it will be
something that’s commensurate with what people have become accustomed to in Calabasas.”
Oversaturation?
Then there is Glendale, which has a massive amount of urban development in the
works. The city has about 2,000 residential
units entitled or under construction in its
downtown area.
Earlier this month, Amidi Group of
Redwood City received stage one approval
for construction of a 535-unit live-work complex at Lexington and Central Avenues in the
core of the city’s downtown. The land is
owned by Citigroup Inc., but the New York
bank is in the process of selling the entire city
block to Amidi.
But the 600,000 square-foot project represents only a fraction of all the dense urban development entitled or under construction in the city.
Vancouver developer Holland Partner
Group is constructing a 238-unit project just a
few blocks from the Citigroup site; Camden
Property Trust of Houston is starting work on
its 315,000 square-foot Glendale Triangle
project, a 303-unit development on San
Fernando Road and Central Avenue in the
southern part of the city; and Molasky Group
of Cos. of Las Vegas has received preliminary
approval to build a six-story, 167-unit project
on Central and Wilson Avenues.
Despite the strong push for development,
the city thinks oversaturation is not a concern.
“We have heard people say it has gone too
far, but it hasn’t,” said Hassan Haghani,
director of community development in
Glendale. “Growth is happening exactly as
we planned.”
May, the broker, said changing demographics will make urban living more than a trend. It
will involve a long-term evolution in the
greater Valley region, with city’s like Glendale
being a prime example.
“The younger generation just lives and
works differently. They much prefer the urban
and high-energy environments. I don’t think
there’s an issue with oversaturation,” he said.
But Brody, the developer of Metro Art in
Sherman Oaks, said those that question the
speed of development and size of demand
need only look at his project.
“If there wasn’t demand, I wouldn’t get
leased up so quickly. The only real place to do
development in these densely populated urban
areas is to go along the retail and transportation
corridors,” he said.
“While homeowners often have concerns,
these are the right places to develop. There
has to be some changes made in terms of regulations and people’s attitudes to allow more
of this type of development.”
SAN FERNANDO VALLEY BUSINESS JOURNAL 19
OCTOBER 28, 2013
SPECIAL REPORT REAL ESTATE QUARTERLY
New Wave
A spate of urban-style condo and apartment projects are being
developed in the greater San Fernando Valley, often situated
near mass transit and with appeal to younger residents.
VILLAGE AT CALABASAS
23500 Park Sorrento, Calabasas
Developer: New Home Co., Aliso Viejo
Cost: $50 million
Project: New Home to tear down the decades-old
Calabasas Inn to build the 220,468 square-foot development. It will feature a mix of one- and two-bedroom
condos, in addition to eight low-income apartments
built above 10,000 square feet of retail. The site is near
the city’s downtown shopping district.
Status: Approved. Tear down of the Inn expected in
spring or summer of 2014. Completion spring 2015.
CIELO AT VILLA METRO
21853 Soledad Canyon Road, Valencia
Developer: New Home Co., Aliso Viejo
Cost: $70 million, including single-family home development
Project: The project features 22 live/work units, attached
to a larger development of 315 homes. The live-work units
are townhomes up to four bedrooms and three bathrooms. The live-work area of each unit is about 400
square-feet and has entrance from the street, allowing
owner to operate a storefront. The project is next to the
Santa Clarita Metrolink station for easy commuting.
Status: Partially open amid continuing construction.
Santa
Clarita
Valencia
CITI LIVE/WORK COMMUNITY
Corner of Lexington Drive and Central Avenue, Glendale
Developer: Amidi Group, Redwood City
Cost: Not disclosed.
Project: Amidi is in the process of purchasing an entire
city block from Citigroup Inc. for its proposed project of
535 live-work units on 3.2 acres at Central Avenue and
Lexington Drive. The development could total 600,000
square feet and include a Citibank branch. Amidi has plans
for a pedestrian-friendly design that could include multiple
paseos and a grand piazza.
Status: Received initial approval.
14
5
Sylmar
118
Simi Valley
Chatsworth
27
Canoga
Park
2 miles
Woodland
Hills
Agoura Hills
101
Calabasas
Northridge
Reseda
Encino
405
210
Van Nuys
5
170
Burbank
Sherman
Oaks
101
Glendale
Hollywood
IL VILLAGGIO TOSCANO
4827 N. Sepulveda Blvd., Sherman Oaks
Developer: M. David Paul Associates, Santa Monica
Cost: $132 million
Details: The 605,000-square-foot project includes 325
units, 52,000 square-feet of retail and a 1,000-space
parking garage with two levels underground. Toscano
will have studios, one- and two-bedroom units, with
rents ranging from $1,500 to $3,500. The units will
surround a central courtyard, with gardens on top of a
commercial podium, similar to space in front of the
nearby Sherman Oaks Galleria.
Status: Approved by the City Council in August, 10
years after first proposed. Construction expected to
begin this year and take about 24 months to complete.
METRO ART SHERMAN OAKS
14140 Moorpark St., Sherman Oaks
Developer: BW Brody Affiliated Cos., Sherman Oaks
Cost: Not Disclosed
Project: The 113-unit mixed-use project is on 1.7 acres
and its 16,500 square feet of retail fronts Ventura
Boulevard. It opened this summer and is already more
than 80 percent leased. Units include one- and two-bedroom apartments. Retail tenants include a Mendocino
Farms sandwich shop and Islands Restaurant.
Status: Opened June 15.
TALARIA AT BURBANK
3401 W. Olive Ave., Burbank
Developer: Cusumano Real Estate Group, Burbank
Cost: $150 million
Project: The 241-unit project slated for a 3.8-acre site in
the city’s Media District will include a 43,000 square foot
Whole Foods market. It is close to the former NBC
Studios, Warner Bros. lot and Walt Disney Co. headquarters. The proposal calls for one-, two-bedroom and threebedroom units in a five-story, 385,000 square-foot building. Talaria would feature courtyards, a lap pool, private
lounge, fitness center and dry-cleaning pickup service.
Status: Proposed. Going through community meetings.
20 SAN FERNANDO VALLEY BUSINESS JOURNAL
OCTOBER 28, 2013
SPECIAL REPORT REAL ESTATE QUARTERLY
Suburban Santa Clarita Gets Urban-Style Living
By ELLIOT GOLAN Staff Reporter
W
hile it may be expected that more
urban communities would be the
target of developers seeking to build
these new projects, even prototypical suburbia
is the site of one.
Cielo at Villa Metro, a 22-unit live-work complex opened earlier this month in Valencia, with
easy access by foot or bike to the city’s Metrolink
station – the kind of development one wouldn’t
necessarily expect in a community known for its
tract homes and long drives to work.
The units are part of the larger Villa Metro
development being built by New Home Co. of
Aliso Viejo, which could eventually feature
315 single-family homes.
“We think this is going to be a big success
and we’re attributing that to the Metrolink station,” said Rick Bianchi, vice president at
New Home. “We’ve already gotten interest
from professionals that want to move out here
and like how convenient it is to get into L.A.”
The 21853 Soledad Canyon Road complex
was originally approved by the city of Santa
Clarita in 2006, with Newhall Land &
Farming Co. as the developer. But the housing
bust put Villa Metro on hold and New Home
bought the project from Newhall Land last year.
The live-work portion of the development
is in its early phases, with four models completed and two more on the way. The total
cost of the development, including the entitled property, houses and live-work units, is
close to $70 million, with the Cielo portion
accounting for a fraction of it.
John Cserkuti, senior vice president at
the Valencia office of commercial real estate
brokerage NAI Capital Inc., said the livework units should be attractive given their
PHOTO BY DAVID SPRAGUE
Live-Work: Developer Rick Bianchi at Cielo at Villa Metro, still under construction.
proximity to transportation.
“The young professional demographic is
absolutely increasing in Valencia, but this isn’t
going to spread too rapidly around here,” he
said. “I don’t think you’ll see the word urban
attached to anything out here for the foreseeable future, but I wouldn’t be surprised to see a
slow increase in the right areas over time.”
Southbound commute
The original Villa Metro development
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called for 406 townhomes and the 22 livework units, but after New Home acquired the
property it downsized the project to 315
homes while keeping the number of multifamily units the same, said Patrick Leclair,
an associate planner for the city.
“The community seems to be pretty in
sync with the project. I haven’t heard any
complaints,” he said.
Cielo is a gated community and features
some of the expected amenities, such as a
recreation area. In addition, Bianchi said the
facility pool will have a view of the nearby
Santa Clara River and there is a community
garden on site where residents can rent space
to plant fruits and vegetables. There is a bike
trail that connects out to the city and a pedestrian bridge over Soledad Canyon Road for
easy access to the Metrolink station.
The live-work units are lofts of up to three
bedrooms and three- and one-half baths, ranging from 1,798 to 2,532 square feet with prices
from the low $400,000s. Within each unit,
there is also about 400 square-feet set aside for
residents to run a business if they like.
Bianchi said each live-work unit has separate entrances to the living area and work
area. And the work portion faces the street,
leaving the owner a chance to operate it as a
storefront. In most cases, the residential portion has access on the back of the building,
away from the street.
This flexibility, said Bianchi, makes the
units especially attractive to people whose
businesses are just getting off the ground.
“You don’t have to service debt on a mortgage as well as service debt on rent for your
office,” he said. “And frankly, if your business
doesn’t make a go of it, you still have a
home. You can just repurpose the work area.”
The single-family portion of Villa Metro
opened this summer, with New Home completing 13 model homes and 52 homes for
sale. In the five weeks since New Home
began selling, Bianchi said more than 40 have
already been purchased. As far as the livework units, the developer said he expects similarly quick sales.
“People just want to live and work all in
the same place now,” he said. “This is the
way things are moving.”