The Wilshire corridor showed signs of strength in the first quarter, with the office vacancy rate dropping in key areas and Dr. David Lee, president of First Korea Bank, buying two more buildings to add to his growing holdings.
In the Miracle Mile, the office vacancy rate dropped to 17.7 percent during the first quarter from 18.6 percent in the last quarter of 1998, according to Cushman & Wakefield Inc.
Meanwhile, Mid-Wilshire posted one of the highest net absorption totals in L.A. County with 111,583 square feet. But its office vacancy rate improved only slightly to 26.1 percent, compared to 27.5 percent in the last quarter of 1998.
Chris Runyon, a senior associate at Grubb & Ellis, said the improvement comes as the Wilshire corridor begins to benefit from tight office markets elsewhere.
"We're still seeing downtown and Westside and Tri-Cities overflow tenants who can't find contiguous space elsewhere," he said.
Once again, Lee was behind some of the biggest transactions in the area. In February, he purchased the 258,684-square-foot Wilshire Hobart Building at 3660 Wilshire Blvd. for about $14 million. He also picked up a 364,321-square-foot building at 3600 Wilshire for $22.4 million.
Lee now owns about 3.5 million square feet of office space, making him the largest commercial real estate owner in the Mid-Wilshire area.
In another major purchase, the Hertz Group, a real estate acquisition firm based downtown, acquired the 12-story Wilshire Square Building, a class-A office building at 3345 Wilshire, for $7 million from Philippine National Bank. Wilshire Square's tenant roster includes Philippine National Bank, Sanwa Bank of California, Federal Express and the YWCA of Greater Los Angeles.
In other moves, the Los Angeles County Sheriff's Department leased 10,000 square feet at 3055 Wilshire after the District Attorney's Office occupied 20,000 square feet in the same building last year.
Despite the drop in the Miracle Mile vacancy rate, leasing activity was slower than expected, according to Rick Buckley at CB Richard Ellis, who brokered a deal late last year in which E! Entertainment Television will move from 5670 Wilshire to the Wilshire Courtyard at 5750 Wilshire.
The lease agreement involves 260,000 square feet of space, with the move expected to be complete next month.
An anticipated deal to lease 100,000 square feet in Museum Square and Wilshire Courtyard to Western Initiative Media fell apart at the last minute, according to Cushman & Wakefield officials.
Meanwhile, Hollywood remained in a holding pattern, with many landlords holding onto property while waiting for several big projects to break ground and perhaps push sale prices higher.
In the Hollywood/West Hollywood area, the overall office market was stronger in the first quarter, with 44,140 square feet of net absorption. The vacancy rate fell to 20.6 percent, compared to 22.3 percent in the fourth quarter, according to Cushman & Wakefield.
"The Hollywood comeback is the sexiest story in real estate, at least in Los Angeles, and it's being geared by development," said Nick Kanieff, president of Kennedy-Wilson International, a commercial real estate investment group.
But he said the area is not likely to see many major changes until construction actually begins on projects like TrizecHahn Development Corp.'s Hollywood & Highland retail/entertainment complex.
"I've made offers on any office building worth acquiring in Hollywood, but people are starting to realize that what they're sitting on is worth more." Kanieff said. "The consensus is that offices will hit $2 (per square foot) within 12 months, which is a 30 percent increase."
Meanwhile, the CIM Group, which has done projects along Third Street Promenade and Old Pasadena, closed escrow on the Hollywood Galaxy at 7021 Hollywood Blvd. but has not announced plans for the property yet.
? Dr. David Lee, president of First Korea Bank, purchased the 258,684-square-foot Wilshire Hobart building at 3660 Wilshire Blvd. for about $14 million. He also picked up a 364,321-square-foot building at 3600 Wilshire for $22.4 million.
? The Hertz Group, a real estate acquisitions firm based downtown, has acquired the 12-story Wilshire Square Building, a class-A office building at 3345 Wilshire, for $7 million from Philippine National Bank.
? The county Sheriff's Department leased 10,000 square feet at 3055 Wilshire after the District Attorney's Office occupied 20,000 square feet in the same building last year.
? The CIM Group closed escrow on the Hollywood Galaxy at 7021 Hollywood Blvd. but has not announced plans for the property yet.
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