Office space in the Hollywood/West Hollywood market remained in high demand last quarter as tenants were drawn to an area that has ramped up its amenities, but still offers lower rents than most Westside alternatives.
Class A office rents jumped 5 percent to $3.72 during the July-September period, up 17 cents from the second quarter and more than 20 percent from the third quarter of 2006, according to Grubb & Ellis Co.
Vacancies were down slightly, to 5.3 percent, a trend that looks like it will continue for the foreseeable future.
“The course of the river has changed directions. Everyone was leaving Hollywood for Santa Monica in the early ’90s. Now we’re seeing a lot of them small commercial production companies and feature film companies coming back,” said John Tronson, principal, Ramsey-Shilling, Commercial Real Estate Services. “You can’t get in and out of Santa Monica anymore and rents there are $6 a foot.”
In addition to more reasonable rents, the Hollywood market’s solid amenities, including the Hollywood & Highland retail center, the Sunset + Vine mixed-use complex, the upcoming W Hotel project, and an influx of trendy restaurants in the area, are also helping to lure tenants, according to Tronson.
Net absorption edged into the black in the Hollywood and West Hollywood market last quarter, but only totaled 5,341 square feet. That number isn’t likely to go up anytime soon. Though there are hundreds of thousands of square feet of new space under construction, the space won’t be available for several quarters.
MAIN EVENTS
– The LeFrak Organization, a New York City family development firm, purchased a 175,000-square-foot, 12-story office tower at 7060 Hollywood Blvd. from Broadstone Hollywood for $50 million. LeFrak plans to spend an additional $10 million to upgrade the building to Class A office space.
– Beverly Flores Equities purchased a 17,400-square-foot office property at 8322 Beverly Blvd in West Hollywood. Gazel Partners sold the property for $6.8 million, or $391 per square foot. The property was 100 percent leased when it was sold.
– Meridian Models Talent Agency inked a five-year full-service lease for 2,519 square feet of office space at 6725 Sunset Blvd. for $2.85 per square foot
– Sherwood Corner LLC purchased two adjacent retail buildings totaling 3,887 square-feet. Tobey Melrose LLC sold the buildings at 8502 Sherwood Drive and 741 N. La Cienega Blvd. for a total consideration of approximately $3.35 million
– Tobey Melrose, the seller of 8502 Sherwood Drive and 741 N. La Cienega Blvd., paid $2.6 million for a 2,400-square-foot retail building at 7965 7971 Melrose Ave. Franco Properties Inc. sold the property.
– Commercial real estate developer CIM Group purchased the landmark Grauman’s Chinese Theatre from Damon Runyon Cancer Research Center of New York and Barlow Respiratory Hospital of Los Angeles for an undisclosed amount. Mann Theatres has a long-term lease at the property and will continue to operate it as a movie theater. CIM already owns several nearby properties.
Lizbeth Scordo
