Despite the hardships faced over the past 18 months during the height of the COVID-19 pandemic, the Antelope Valley’s real estate markets are rebounding, and the outlook is positive.
That was one message during Wednesday’s Semi-Annual Forum from the Antelope Valley Economic Development and Growth Enterprise, or AV EDGE.
The virtual gathering presented information from local experts on real estate, aerospace, water and digital connectivity, as well as legislative updates from regional officials.
As with society as a whole, the pandemic has had ripple effects — good and bad — on real estate.
“Overall the Antelope Valley commercial market is mostly stable in the office and retail sectors, with industrial and multifamily sectors leading the way to growth,” and indicators suggest these trends will continue into 2022, said Harvey Holloway of Coldwell Banker Commercial Realty.
The pandemic closures may have had an impact on the commercial real estate market, with many office workers switching to working from home. “It’s going to take some time to see what percentage of these employees return to work at the office and how it’s going to drive the market for this type of space,” he said.
With 4.5 million square feet in office space, the Antelope Valley has a vacancy rate of 5.4%, well below the 10-year average, Holloway said.
Rents are up slightly, by 0.9%, he said.
The value of office sales for 2021 is the second-highest in five years, at $33 million, and the median price is $155 per square foot, which is second only to 2017 figures, he said.
The remote working trend also affected the residential real estate market, with home buyers looking for more space to meet their telecommuting needs, or moving to other communities, since commuting is no longer a primary concern, said Keny Terracciano of RE/MAX All Pro.
“We’ve always been a bedroom community, but now you’re seeing more and more people coming from downtown,” he said.
Historically low interest rates have provided incentive for either home buying or refinancing, he said.
Last year, the number of first-time homebuyers was the highest in the past 10 years.
The housing market faces pressure as millennials — those age 21 to 39 years old — enter the market and Baby Boomers are looking to downsize, Terracciano said.
California’s famously high real estate prices saw a spike earlier this year, but that trend appears to be cooling now, Terracciano said.
“It just can’t keep this pace too much longer,” he said.
In Los Angeles County, the median price is $830,000, and in Kern County it is $326,000. The bulk of the Valley’s communities fall in between the two, he said.
In Palmdale, as of August, the median home price was $497,000, while in Lancaster it was $450,000, he said.
Despite a cooling market, the Valley still faces a lack of supply to meet the demand, especially with the needs of incoming aerospace workers as that industry grows here.
“The problem is there’s more demand than we can build right now,” Terracciano said.
While the state’s housing affordability index fell this year, to 25%, the Antelope Valley still has an advantage in cheaper property, he said.
Retail businesses in general took a hit with the closure measures during the pandemic.
“The Coronavirus (pandemic) impact on the retail market may lead to lasting structural changes within the retail section,” Holloway said, as e-commerce flourished and may have permanently altered shoppers’ patterns.
Retail vacancies in the Valley are about 6.7%, which is roughly in line with the past five years, he said, and above the overall market average.
Rents, however, have risen by 1% over the past 12 months and retail property sales are lower than before, but up over 2020.
The Valley has some 10.9 million square feet of industrial space and was not greatly impacted by the pandemic, Holloway said.
The market did show a big gain in the dollar value of sales in the past year, registering the highest in the past five years, at just under $160 million.
However, about half that volume was a single sale, of the RiteAid distribution center in Lancaster, which went for $74 million, Holloway said.
The median price of industrial space is $120 per square foot, the highest in the past five years.
The market for multifamily residential property, considered those with 10 units or more, is priced significantly lower than the rest of Los Angeles County and has made this the best-performing market in the region, Holloway said.
Vacancies have trended downward during the pandemic, which has made this “one of the tightest apartment locations in the metro (Los Angeles area),” he said.
However, the relatively low rents also tend to deter new development, he said.
