Vacancy rates broke the double-digit mark in the Wilshire Corridor in the first quarter, as the recession finally hit hard in one of the last remaining strongholds in Los Angeles County.
The submarket, which runs along Wilshire Boulevard between downtown and Beverly Hills, saw its vacancy rate rise to 11.3 percent, up from 9.8 percent at the end of last year as 181,000 square feet of space returned to the market.
Brokers and others familiar with the area said they didn’t know of any large office space holders pulling up stakes. Rather, the corridor appeared to be hit by a bunch of smaller tenants that either closed down or consolidated.
“There are cutbacks everywhere, but I haven’t heard of any significant company leaving the Miracle Mile because they either closed their doors or found better rents somewhere else,” said Stephen Kramer, principal at Kramer Law Group and president of the Miracle Mile Chamber of Commerce. “We’re still the best deal in town.”
The departures put downward pressure on Class A rents, which fell to $3.07 from $3.19 at the end of 2008, as landlords lowered prices to attract and retain tenants.
“Rents have dropped effectively about 15 percent of what they were just eight months ago,” said Chris Runyen, senior managing director at Charles Dunn & Co. “It’s not attributable to any major trends, it’s just that landlords are getting aggressive to fill their large blocks of space.”
In one of the biggest deals of the quarter, Oprah Winfrey Network LLC took 51,000 square feet at 5700 Wilshire Blvd., one of two buildings at the Wilshire Courtyard complex. The new TV channel took space vacated in December by the entertainment trade publication Variety, which moved only a few buildings down the street.
Financial terms of the 66-month lease were not disclosed, but asking rates for the space were $3.50 to $3.75 per square foot. The building is owned by San Francisco-based RREEF.
Office Market At a Glance
Inventory: 14.2 million square feet
Under Construction: 0
Class A Asking Rents: $3.07
MAIN EVENTS
– Wetherly Capital Group LLC singed a lease renewal and expansion for its headquarters at 11601 Wilshire Blvd. The 64-month lease is valued at $1.6 million, with a starting square-foot price of slightly less than $4. Wetherly increased its footprint to 6,300 square feet; it previously occupied 4,600 square feet. The property, previously known as the Wachovia Building, is owned by Equity Office Properties, a unit of private equity firm Blackstone Group LP.
– The Oprah Winfrey Network LLC took 51,000 square feet for its headquarters in the Wilshire Courtyard building at 5700 Wilshire Blvd. Financial terms of the 66-month lease were not disclosed, but asking rates for the space were $3.50 to $3.75 per square foot. The building is owned by San Francisco-based RREEF.
– Jamison Services Inc., one of the largest property owners in the Wilshire Corridor, moved its headquarters to 3424 Wilshire Blvd. from downtown. Jamison will occupy approximately 25,000 square feet after reconfiguring the space. Jamison purchased the 203,000-square-foot Wilshire Center building last year for $31 million from the Roman Catholic Archdiocese of Los Angeles.
– Singapore Airlines vacated about 29,000 square feet, or two full floors, at 5670 Wilshire Blvd. The airline moved its offices to El Segundo to be near its operations at Los Angeles International Airport. The airline has been hurt by the slowdown in air travel.
