Hollywood kept coming back in the second quarter, with high-end office buildings posting solid leasing gains as more entertainment firms moved to the area.

The vacancy rate at the 23 buildings in Hollywood listed as class A fell to 13.3 percent in the second quarter after hitting a high last year of 19.3 percent, according to Julien J. Studley Inc.

In the overall office market, 171,542 square feet of space was leased in the second quarter, pushing down the vacancy rate to 12.2 percent from 12.5 percent total in the first quarter.

The average monthly lease rate grew slightly, to $1.70 per square foot, from $1.68 in the first quarter. That cost was climbing quickly in the more desirable buildings.

"Most of the competitive class-A buildings are 90 percent leased, with rents upward of $1.75, and will approach $2 by year-end," said Nick Kanieff, president of the commercial real estate investment group at Kennedy-Wilson International.

At the renovated El Capitan Building on Hollywood Boulevard, prices are approaching $2.10 per square foot, Kanieff said. The building is 55 percent leased after undergoing a major renovation last year, he said.

In another significant development, Chris Runyan, associate vice president of Grubb & Ellis Co., said the CNN Building at 6430 Sunset Blvd. went into escrow as part of a deal expected to close next month.

The buyers and sale price of the 15-story, 205,000-square-foot property were not released, though Runyan, who handles leasing at the building but is not dealing with the sale, said the asking price was $1.85 per square foot.

Kevin Berg & Associates leased 7,000 square feet in the second quarter, and Relay Point Inc. picked up an additional 6,000 square feet in the building as part of an expansion.

"It's almost 95 percent occupied," said Runyan. "We started asking $1.05 a square foot, and we're now at around $1.70. It's looking good."

Other second-quarter activity came at Sunset Media Tower at 6255 Sunset Blvd., which attracted two new tenants: Associated Production Music leased 4,000 square feet, while Bitmax Entertainment agreed to occupy 4,500 square feet.

And at 7080 Sunset, Sound Deluxe completed a 15,000-square-foot expansion.

Much of the new activity is generated by the relocation of entertainment-industry firms the pace of which quickened when renovations were finished last year at the El Capitan.

In February, Klasky-Csupo, the Emmy-winning animation firm that does "The Rugrats" cartoons, left its space on Highland Boulevard after buying a shuttered Mercedes-Benz dealership at 6353 Sunset, near Vine Street.

Klasky-Csupo expects to occupy the entire 96,000-square-foot building with offices upstairs and flexible studio operations downstairs. By mid-2000, the number of employees could grow from its current 270 to about 500.

The purchase allows the company to consolidate employees now scattered in half a dozen facilities in and around Hollywood into a customized operation.

Near the new Klasky-Csupo site are several other signs of Hollywood's revitalization, including the Hollywood Marketplace retail and entertainment development and the renovated Hollywood Cinerama Dome.

Even greater activity is expected as construction continues on TrizecHahn Development Corp.'s entertainment/retail project at Hollywood and Highland Avenue. The development is designed to include more than 300,000 square feet of studio, retail, entertainment and food-service space.

Kanieff expects the market for top-flight space to gain even more strength as additional entertainment companies especially in production and ancillary businesses become attracted to the area.

"Hollywood's got a great location midway between the Westside and Tri-Cities, so it's convenient and cheaper than the $3 to $4 a square foot you'll pay in those submarkets," he said.

He also believes the status of a Hollywood address will draw tenants.

"There's a cachet associated with the Hollywood name there's no better brand name in the world except maybe Coke and McDonald's so people want to be linked to it," Kanieff said. "Now it makes sense with lower rents than the other submarkets."

Major Events

? The CNN Building at 6430 Sunset went into escrow as part of a sale expected to close in August.

? Kevin Berg & Associates leased 7,000 square feet in the CNN Building.

? Relay Point Inc. expanded by 6,000 square feet in the CNN Building.

? Bitmax Entertainment leased 4,500 square feet, and Associated Production Music agreed to occupy 4,000 square feet at Sunset Medic Tower on Sunset Boulevard.

? Sound Deluxe expanded by 15,000 square feet at 7080 Hollywood Blvd.

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