Newmark PCG

May 24, 2021

North Valencia is the northern portion of the incorporated area of Valencia, a neighborhood of Santa Clarita, California in the mountains of Los Angeles County. We define North Valencia in this market report as the area bounded by the Interstate 5 Freeway to the West, the mountains to the North, Kelly Johnson Parkway to the East, and the Santa Clarita River to the South.

Originally developed as part of a master-planned development by the Newhall Land and Farming Company in the 1960s, Valencia has continued to expand in population and industries. North Valencia boasts one of the highest median salaries in California at $115,034 due to the clusters of many high paying industries, including biomedical with Boston Scientific and Alfred Mann Foundation facilities, aerospace engineering with Lockheed Martin and Aerospace Dynamics International, and tourism with Six Flags Magic Mountain just on the other side of the Interstate 5 Freeway. The Newmark Private Capital Group has done extensive research on the North Valencia market through one of our listings, Valencia Corporate Plaza, a two-building office campus along the I-5 Freeway.

The Valencia Project – 21,500 New Homes

The Valencia Project is a $12 billion, 21,500-home planned community by Five Point Holdings, LLC. Located on 15,000 acres next to Valencia, Five Point is building a new community that will offer a mix of homes, offices, retail, and entertainment and devoting 10,000 acres to open space.

As of December 2020, Five Point sold 1,268 homesites and anticipated 900 homesite sales in 2021. In May of 2021, Emile Haddad announced on the company earnings call that 60 model homes are under construction, and delivery is expected in “just a few weeks.” Five Point has partnered with KH Home, Lennar, Richmond American, Toll Brothers, and TRI Pointe Group to build the seven “villages” and 18 neighborhoods in the community.

There will be seven “villages” within the community. Entrada North and South are part of the original Valencia Specific Plan established in 1965. Homestead South, Landmark Village, Legacy Village, Mission Village, and Potrero Valley are part of the Newhall Ranch Specific Plan from 2003. As of May 2021, Mission Village is under construction, and Landmark Village is approved for construction.

Sources: Ranch on the River, LA Daily News, Five Point 2020 Annual Report, and Five Point Q1 2021 Report

The Valencia Project is a 21,500 home development that will be delivered in stages.

Project by Five Point Holdings, LLC

North Valencia is a Hub for the Film Industry

First used by Hollywood Studios for filming in 1903, the Santa Clarita Valley was home to Western movies and silent comedies due to the open space, plentiful ranches, and the picturesque mountain range. The region quickly became a favorite of film directors and movie studios alike. Steven Spielberg shot his first feature film, Duel, on Sierra Highway and Vasquez Road, and Warner Brothers chose Valencia Oaks Ranch as the shooting location for The Dukes of Hazard. Studios have favored Valencia because it is within the 30-mile zone, which is the maximum distance union film projects will allow the crew to travel before increasing rates. Because of the financial incentive of the location, film studios built dedicated film backlots on ranches in Santa Clarita, including Disney’s 890-acre Golden Oak Ranch, which is the set of the Pirates of the Caribbean II & III.

Today, Santa Clarita is so highly favored by film studios the City created the Santa Clarita Film Office, which is dedicated to assisting film projects within the City and surrounding area. Roughly 11% of the 59,028 employees in Valencia, California, are in the Motion Picture & Amusement industry, and there are 125 companies and independent contractors in the neighborhood alone.

Sources: SVC History, Santa Clarita Film Office, California Film Commission, and Golden Oak Ranch

As of 2021, 11% of North Valencia’s employees work in the film industry.

Source: ESRI Demographic Forecasts

Aerospace Industry in North Valencia

World War II and the Cold War’s increase in defense spending created a hub of aerospace engineering in Southern California via Lockheed Martin, Boeing, Raytheon, General Dynamics, Northrop Grumman, and others. Lockheed Martin established several facilities in the 1950s and 1960s, including Valencia, Burbank, and Palmdale, California. In 1959, Lockheed Martin established a major research and development operation across several hundred acres in North Valencia, and workers flocked to the high-paying engineering jobs.

The Palmdale site is now the home of Skunk Works, Lockheed Martin’s Advanced Development Programs, responsible for many aircraft designs, and the Burbank and Valencia facilities have essentially shut down. In 2000, Lockheed spokeswoman Gail Rymer was quoted in the Los Angeles Business Journal saying that “the decision was made over 10 years ago to move out of Burbank.” By that time, Burbank and Valencia’s population had dramatically increased, and both locations were popular among Hollywood film companies, which is probably not ideal for secret research and development of military equipment, but that is speculation.

Lockheed Martin’s sale of the Valencia site in 2002 diversified the aerospace industry in Valencia; it did not destroy it. Lockheed Martin continues to operate a research facility in North Valencia at 28350 Kelly Johnson Parkway, and the company uses three Valencia-based suppliers.

Source: Lockheed Martin Approved Process Sources

North Valencia is a Leading Submarket of Biomedical Research

Biomedical technology companies are normally clustered around a university due to the easy access to a highly educated workforce and funding. However, significant research institutions like Boston Scientific and the Alfred Mann Foundation improved the biomedical industry in Valencia, and the talent pool followed. For decades biomedical companies were founded in or moved to the Santa Clarita Valley, and many are in North Valencia.

The Alfred Mann Foundation’s mission is to research and develop medical devices that benefit the public and make them available to the mass market, which is generally a challenge for university-based research. Advanced Bionics was founded in 1993 by Alfred Mann with the goal of “helping deaf people hear,” and it is now a world leader in cochlear implant systems, which is an electronic device that partially restores hearing. In 2006, Boston Scientific’s Neuromodulation Division built its headquarters to further develop its bioelectric therapies, which are implants that send electronic signals to treat chronic diseases.

The Santa Clarita Valley is a leading submarket of innovation for the biomedical research industry. The Southern California life science market cover over 20.1 million square feet and the City of Santa Clarita has 15 companies alone.

Sources: Santa Clarita Valley Economic Development Corporation & The Alfred Mann Foundation

The full report includes, among other information, a map of the major ownership groups, the current development pipeline, and recent sales and leasing activity in North Valencia.

Disclaimer: The information contained in this article is provided for general informational purposes only, and should not be considered or treated as legal or tax advice and represents only general information that may or may not be applicable to the reader’s particular situation. The reader should consult its own attorney and/or tax advisor if specific guidance, information, or advise is required.

About the Author(s)

Sean Fulp is based in Los Angeles and leads the Newmark Private Capital Group, which focuses on selling small and mid-sized office, industrial and multifamily properties throughout the Western U.S.