Office Market At a Glance

Inventory: 4 million square feet

Under Construction: 400,000 square feet

Class A Asking Rents: $3.64

Those with a glass half-empty outlook might say the Hollywood-West Hollywood office market has taken a definite hit, but glass half-full folks look at other submarkets to make their point.

Certainly, asking rents have slid over the past year in the area, with Class A rates off about 25 cents to $3.64 and Class B doing only a bit better. Though the market boasted a positive net absorption rate for the second consecutive quarter, it was still quiet on the sales side, with only one building changing hands.

But the market’s 11.8 percent vacancy rate is lower than all but two other office markets in the county, and nearly five points below the average. That rate also marked a 2 percent drop for Hollywood from the fourth quarter, according to Grubb & Ellis Co.

So how to makes sense of it all?

The booming economy of a few years ago coincided with Hollywood’s facelift and influx of new residential space, bringing in a new generation of office tenants looking for a good deal in a hip market – who didn’t want to pay soaring Westside prices.

“There was a new buzz in Hollywood. It had these new amenities, these new restaurants and had the cheaper rent,” said Martin McDermott, vice president with Grubb & Ellis. “It just hasn’t declined as much, whereas you’re seeing an exodus in some of these other submarkets because they’re coming off these higher rents.”

What’s more, the soft sales market is not altogether a dud. Smaller buildings on sale for less than $3 million, and especially less than $2 million, have been moving.

MAIN EVENTS

• Donor Services Group, a fundraising company for non-profits, has signed a seven-year lease at 6715 Sunset Blvd. for $3.5 million with landlord Crossroads Trust. The 19,484-square-foot building was most recently occupied by LA Weekly, which moved to West Los Angeles in 2008. Donor Services plans to consolidate its L.A.-area offices there.
• Go Film purchased a 4,320-square-foot property at 6507 De Longpre Ave. for $1.7 million. Bank of America sold the REO property, which sits on less than one-fifth of an acre and includes six parking spaces.
• Irwin Entertainment leased 11,200 square feet of office space at 710 Seward St. for one year. The tenant is paying $1.46 per square foot.
• The luxury W Hollywood Hotel and Residences opened on Hollywood Boulevard. The $360 million building features 143 condos, 305 guest rooms and suites, a Bliss Spa, and the $12 million rooftop nightclub.
• Xenon Investment Corp. bought the five-story, 51,664-square-foot Terraces at the Grove apartment complex at 110 S. Sweetzer Ave. in West Hollywood for $12.8 million cash in a distress sale.
• In another multifamily sale in West Hollywood, 1275 Sweetzer Apartments LLC purchased a 22,804-square-foot apartment building at 1275-1285 N. Sweetzer Ave. for a bit more than $6 million. The two-story complex includes 25 one-bedroom apartments, two two-bedrooms and one three-bedroom unit.