The San Fernando Valley saw its vacancy rate tick down nearly a full percentage point to 14.5 percent in the second quarter from 15.4 percent in the previous period.
Each of the Valley’s submarkets saw positive net absorption, with the biggest improvement coming in the East Valley, where nearly 165,000 square feet were taken off the market. The vacancy rate there dropped steeply, falling to 10.3 percent from 15.9 percent in the previous period, making it the tightest market in Los Angeles County, according to data from Jones Lang LaSalle Inc.
The central part of the Valley also posted one of the county’s lowest vacancy rates, coming in at 11.8 percent, down from 12.5 percent in the first quarter. Even the West Valley submarket, which has been underperforming recently, made gains in the second quarter and has seen its vacancy rate drop to 16.1 percent from 18.9 percent year to year.
NBC Studios’ move to Universal City from Burbank is responsible for a tightening in the market for smaller spaces in the area, said Stacy Verheilig-Fraser, senior managing director at Charles Dunn Co. Inc.
“A lot of people that do business with (NBC) want to be closer to them, so they’re moving closer to Universal City. I’ve got the least amount of inventory I’ve had in a long time. We’re really running out of space,” she said.
Several television production offices that do not film on the studio lots are also leasing spaces around 10,000 square feet in the East Valley area, she said.
Aside from entertainment, technology and back-office tenants in the health care and medical sectors are driving demand in Encino and Sherman Oaks, said Natalie Bazarevitsch, senior managing director at CBRE Group Inc. She is forecasting overall steady improvement in the Valley as a whole, with no major move-ins on the horizon.
While asking rates are flat or falling in most of the Valley submarkets, average per foot rents have steadily increased in the East Valley – jumping to $2.96 in the second quarter from $2.72 in the year-earlier period, according to Jones Lang LaSalle.
A bright spot for the West Valley was the announcement by Farmers Insurance Group that it will make its Woodland Hills offices, where it leases 420,000 square feet, its new headquarters. The company plans to slowly take up space in two buildings at 6301-6303 Owensmouth Ave. as other leases there expire. Eventually, the insurance company plans to occupy all 570,000 square feet in the buildings.
One of the larger investor sales of the quarter took place in Woodland Hills, when Adler Realty Investments Inc. paid Equity Office Properties $80 million for 13 Class A and B buildings at 5550 Topanga Canyon Blvd. The buildings, dating to the early 1980s, are part of Warner Center Corporate Park.
– Karen E. Klein
Main Events
Landmark Appraisal Services is taking two floors of Class A office space at 5161 Lankershim Blvd. in North Hollywood. The 13,400-square-foot lease puts Landmark into a building adjacent to Universal City and the media district.
Refinery moved into 19,600 square feet at 14455 Ventura Blvd. in Sherman Oaks in late June. The seven-year lease puts the boutique ad agency specializing in the entertainment industry into two floors in the building.
Thrifty Oil Co. purchased two Class A buildings in Warner Gateway totaling 256,000 square feet. The buildings, at 21820 and 21860 Burbank Blvd., are part of Warner Center in Woodland Hills and had been owned by the Weingart Foundation.
Blueprint Post Production leased two floors in a three-year deal for 15,373 square feet at 4146 Lankershim Blvd. in North Hollywood. The property is part of the Lankershim Media Center.
New York merchandising firm Araca Holdings LP signed a lease for 65,000 square feet of industrial space at 459 Park Ave. in San Fernando in one of the largest industrial transactions of the quarter.
ITV Studios America, the reality television producers behind Gordon Ramsay’s “Hell’s Kitchen” and “Kitchen Nightmares” on Fox, renewed its 40,000-square-foot lease at 15303 Ventura Blvd. in Sherman Oaks.
