The Westside’s commercial real estate activity calmed somewhat in the second quarter.
The area’s vacancy rate has risen steadily to 9.3 percent at midyear from 7.3 percent in the third quarter of 2007, according to Grubb & Ellis Co. Second-quarter average asking rates remained at $4.93 per square foot.
“We’re coming out of the strongest market we’ve ever had in terms of asking rates and vacancy rates,” said Amir Araghi, a research analyst with Grubb & Ellis. “The rates are still high, but there’s not the fervor there was.”
Santa Monica led the rates race, posting an average asking rate of $6.02 per square foot, but that was down 9 cents since the start of the quarter. It was the only Westside submarket to chart a decrease in vacancy over the three months, falling a point to 10.2 percent.
Elsewhere west of the San Diego (405) Freeway, Playa Vista remained a hotbed of activity, with eight commercial office developments either proposed or under construction. That’s a lot of new space for a submarket that’s seen vacancies soar to 17.5 percent from 8.1 percent a year ago.
But brokers expect demand for the new construction to be high given how the projects come with ample parking, lots of greenery and even biking paths. Two recent transactions bore this out, including one big one.
Lincoln Property Co. and ASB Real Estate Investments inked a deal with Fox Interactive Media for 421,000 square feet at the Horizon at Playa Vista project, currently under construction. The lease is said to be for 12 years at about $350 million. Fox will consolidate several L.A.-based operations into the space.
Office Market At a Glance
Inventory: 43.1 million square feet
Under Construction: 591,000 square feet
Class A Asking Rents: $4.93
MAIN EVENTS
– The organization that presents the Grammies expanded and relocate to 67,000 square feet of headquarters space in a new building at 3030 Olympic Blvd. in the Lantana Media Entertainment Campus. The Recording Academy’s $91 million deal ranks among the highest rental rates ever (reportedly about $7.55 per square foot over 15 years).
– An unnamed foreign buyer purchased the 111,067-square-foot Promontory office building at 5901 Deep Valley Circle in Culver City from Pacifica Real Estate Group for $29.5 million.
– The Lefrak Organization of New York acquired the 63,286-square-foot Class A medical office building at 120 S. Spalding Drive in Beverly Hills from a joint venture between Cambra Realty and Angelo Gordon & Co. The building, which was 100 percent leased at time of sale, went for $55 million. The partnership also acquired the 104,000-square-foot office building at 10351 Santa Monica Blvd. for an estimated $35 million from Arden Realty.
– Antar Real Estate LLC purchased the 15,950-square-foot office building at 10436 Santa Monica Blvd. from the Gillis Family Partnership for $11.65 million.
– LaSalle Investment Management bought the 179,000-square-foot Atria West office complex for $47 million from Foster City-based Legacy Partners on behalf of Alaska Permanent Fund Corp. The West L.A. multibuilding property at 10585, 10635 and 10669-10685 Santa Monica Blvd. is 95 percent leased.
