DOWNTOWN: Maguire’s Building Proposal Reflects a Low Vacancy Rate

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Until recently, the only developers poking around downtown Los Angeles were residential and retail. Then Maguire Properties proposed a $300-milion, 1 million-square-foot office tower at 755 Figueroa St.


The proposal is a reflection of the area’s 14.1 percent vacancy rate, the lowest in recent history, according to Grubb & Ellis Co.


“This would be the first new office building development in downtown since 1992,” said Chris Runyen, senior managing director for Charles Dunn & Co. “It would add approximately 25 percent to the existing vacant inventory.”


The low vacancy rates have slowly but steadily pushed rents over the last several quarters to new highs. Class-A average asking rates closed 2006 up 16 cents to $2.86 per square foot. And top-tier buildings are asking and getting above $3, still a bargain compared to the Westside.


The area’s relative affordability and increasing attractiveness is luring new tenants to the market. The Maguire project could entice even more, especially those in search of large blocks of space. It also could provide a home for current tenants who are split between buildings.


“Other landlords will need to be that much more aggressive to keep tenants and/or compete for new ones,” Runyen said.


More immediately, expect investors to continue to pick up assets in the area. “Strong demand, capital trying to find a home and continued growth in rental rates due to lack of supply is the trifecta for investors,” said Bob Safai, principal of Madison Partners.



Margot Carmichael Lester



MAIN EVENTS

Herbalife Ltd. announced it will relocate its headquarters from Century City to the L.A. Live mixed use entertainment complex in a 10-year, 60,000-square-foot deal. Financial terms were undisclosed.


Wholesale insurance broker Worldwide Facilities Inc. will relocate from 3530 Wilshire Blvd. to Ernst & Young Plaza in a 23,000-square-foot, full-floor lease for undisclosed terms.


Law firm Clark & Trevithick will extend its 30-year tenure at 800 Wilshire Blvd. in an 18,000-square-foot renewal and 2,000-square-foot expansion in a 12-year, $8-million deal. The transaction brings the 16-story property at the corner of Wilshire Boulevard and Flower Street to 80 percent occupancy.


Boston-based Beacon Capital Partners bought the three-building, 314,164-square-foot 600 Wilshire Blvd. complex from Foster City-based Legacy Partners for a price thought to be $67 million. The building was 78 percent leased at the time of sale. Beacon also unloaded several other properties just before the close of the year, selling 10 Class-A office buildings to New York’s Broadway Partners Realty Inc. for $3.3 billion.


Jamison Properties purchased the 136,000-square-foot Brunswig Square office building from Santa Ana’s G REIT for $26.9 million. The acquisition is the most recent for Jamison, which owns most of the assets in Mid-Wilshire and has begun to expand into downtown and other markets within the county. The building at 360 E. Second St. in Little Tokyo was 94 percent leased at the time of sale.

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