Nearly every submarket on the Westside experienced a vacancy increase last quarter, but the exodus seems to be slowing down.
Vacancies rose about a half-percentage point to 13.4 percent during the April-June period, according to Grubb & Ellis Co. It was a less dramatic jump than during the first quarter of the year, when vacancies shot up more than a point and a half.
The Marina del Rey-Culver City submarket, which has suffered from higher vacancy rates than its Westside counterparts over the past couple of years, was the only segment that didn’t experience a vacancy increase, with the rate remaining at roughly 17.5 percent.
Brokers attributed the stability to the desire of software, gaming and design firms to be in the area. But at the same time the statistic is somewhat misleading. It doesn’t reflect that Fox Interactive Media, which operates the MySpace Web site, pulled out of a deal move into nearly a half million square feet of space in two new buildings at Playa Vista.
Overall, Class A asking rents on the Westside dropped 6 cents last quarter, down from an average of $4.93 during the same period in 2008. And historically pricey office markets Beverly Hills and Westwood both ended the second quarter with higher asking rents, up 15 cents to $4.37 and 9 cents to $4.21, respectively.
“If you’re in a premier building or you need to be in a premier building … the reality is they’re pretty well leased,” said Anthony Gatti, managing director, Jones Lang Lasalle.
Net absorption remained in the red during the second quarter, as the Westside gave back more than 250,000 square feet, but that was better than the prior three-month period, when the market returned more than 663,000 square feet.
“People have been on the sidelines and now, with their leases coming due, some don’t have the luxury of time anymore,” added Gatti. “They have to make decisions, so activity is starting to increase again.”
Office Market At a Glance
Inventory: 43.1 million square feet
Under Construction: 1.2 million square feet
Class A Asking Rents: $4.15
MAIN EVENTS
– Santa Monica’s Housing and Economic Development division bought a 9,943-square-foot retail building, at 1332-1336 Fifth St., for $5 million. The Ralph Karesjian Family Trust sold the 81-year-old property, which includes office and warehouse space in addition to the retail storefront.
– Fox Interactive Media pulled out of a $350 million deal to lease some half a million square feet at two new Playa Vista office buildings. The News Corp. unit operates the MySpace Web site, which has faced stiff competition from other social networking sites.
– Xenon Investment Corp. sold a 16-unit, multifamily property totaling 14,399 square feet for nearly $3 million. 1626 N. Fuller LLC purchased the building.
– E6 LLC purchased a five-unit, multifamily property totaling 3,256 square feet at 844 14th St. in Santa Monica for $1.41 million.
– Sony inked a 10-year lease for 47,843 square feet at 2425 Olympic Blvd. in Santa Monica’s Water Garden. Terms of the deal were not disclosed. Sony had previously occupied other office space within the large office complex.
– The University of California agreed to buy a seven-story medical office building on the UCLA campus from Held Properties Inc, an L.A. private real estate company, and partner Jones & Jones of Ojai. The fully leased 123,242-square-foot building traded hands for $42.3 million.
– Construction company Kiewit Pacific Co., a subsidiary of Omaha, Neb., construction and engineering giant Kiewit Corp., subleased 49,570 square feet at the 6060 Center Drive at the Howard Hughes Center through February 2011. Terms of the sublease with Santa Monica-based video game developer Activision Blizzard Inc. were not disclosed.
