A year ago, the Hollywood-West Hollywood office market was on top of the world. Vacancies were below 4 percent and Class A rents were creeping into Beverly Hills territory.

Oh, how times have changed. The market that had previously been buoyed by the entertainment industry is now feeling the pinch.

The first quarter saw vacancies climb more than 1.5 points to 12.3 percent, triple the rate of a year ago, according to Grubb & Ellis Co. Net absorption fell deeper into the red as 63,937 square feet of space was put back on the market.

“A lot of my landlords who never really experienced much vacancy are now dealing with it,” said Jeff Luster, chief executive of commercial real estate firm Major Properties. “Some owners are getting tenants either dropping off the keys or asking for major rent reductions.”

Class A asking rents remained about the same at $3.88 per square foot, but Class B rents fell 13 cents to $2.48. Even properties with asking rents priced well-below market value can be hard to fill. The expense of moving is often out of the question for companies trying to tighten their belts, leading tenants to restructure current leases, Luster said.

“The activity level on leasing is very, very slow to almost nonexistent,” he added. “I have a creative office space listing at $1.25 (per square foot). There are similar listings at $2.50 and I still have zero activity. No one even calls to look at it.”

When it comes to sales, the buyer pool continues to shrink as credit remains difficult to secure. “People who were prudent and saved their money will get the buys of a lifetime,” Luster said.

Office Market At a Glance

Inventory: 3.9 million square feet

Under Construction: 515,000 square feet

Class A Asking Rents: $3.88

MAIN EVENTS

– Suaya Properties, a property management, development services and restaurant consulting firm, bought a two-story retail building at 6740 Hollywood Blvd. for $4.29 million from private investors. The 6,500-square-foot property is fully leased to Fashion Hollywood Souvenir Shop.

– New York-based Milk Group, a photography studio, equipment rental firm and production house, has leased the former Technicolor Studios at 855 N. Cahuenga Blvd. for 30 years. Milk is renting the 46,500-square-foot building from a private family trust for its Milk Studios, and house production and casting divisions.

– The Los Angeles County Department of Mental Health inked a five-year deal to lease a two-story, 6440-square-foot office building at 947 Cole Ave. for a total consideration of $1.3 million. Race car driver and advertising firm owner Tomy Drissi is the landlord.

– BOA Steakhouse broke ground on its 13,000-square-foot West Hollywood restaurant at Luckman Plaza, 9200 Sunset Blvd. BOA will vacate its Grafton Hotel location, also on Sunset, when it moves into the new space this spring.

– The owners of Virgin Megastores North America announced they will close the music retailer’s remaining six U.S. locations, including the 20,000-square-foot store at the Hollywood & Highland Center.

– Animation firm Titmouse signed a 12-month lease to take 4,000 square feet of office space at 6600 Lexington Ave. The deal was valued at $120,000.