Base of Small Tenants Helps Complex Outpace Market
Real Estate by Danny King
At Santa Monica Business Park, it's business as usual in a city that's been anything but.
Infomercial marketing company Guthy-Renker renewed its lease for 25,000 square feet at 3340 Ocean Park Blvd. Total consideration for the five-year deal exceeded $4 million.
The deal marks the continued success at the 1.1 million-square-foot office park in a Santa Monica market whose vacancy rate multiplied nearly six-fold between the third quarter of 1999 and the end of last year. Vacancies at the complex, which is owned by Equity Office Properties Trust and has benefited from serving primarily small (sub-50,000-square-foot) tenants, is about 14 percent, 4 percent less than Santa Monica's vacancy rate for the first quarter, according to Grubb & Ellis Co.
Its largest tenant, Activision Inc., leases 80,000 square feet, according to Bruce Schuman, senior vice president at Julien J. Studley Inc. and representative of the tenant.
"They didn't do a whole lot of dot-com space," said Schuman. "Because you don't have a lot of big tenants, they didn't get hit that hard."
The deal also illustrates a market whose rental rates are declining from the lofty $4-per-foot heights of mid-2001. While space at Santa Monica Business Park never hit those levels, rents did top out at about $2.85, about 35 cents higher than the starting rent with Guthy-Renker.
Equity Office Properties was represented internally by Gayle Goldstein.
The uptick in demand for smaller industrial buildings in the Mid-Cities and Inland Empire appears to have extended to the Santa Clarita Valley.
Beverly Hills-based Black Equities purchased at 52,500 square-foot-building at 27655 Avenue Hopkins in the Valencia Industrial Center from pension fund investor RREEF. Terms of the deal were not disclosed, but local sources estimate the price at about $4 million.
The deal points up the increased demand for sub-100,000-square-foot property amid a North Los Angeles market whose industrial vacancy rates rose to 7.5 percent in the first quarter from 4.1 percent for the year-earlier period.
Other Valencia Industrial Center sales this year include Mann Biomedical Park LLC's purchase of 21 buildings consisting of 420,000 square feet, and Branam Properties' purchase of a 76,000-square-foot building.
"You take all the buildings over 100,000 square feet that are available off the market and the vacancy factor in the Santa Clarita Valley would be roughly 5 percent," said Jim Linn, senior vice president at Grubb & Ellis. "There's a short supply of buildings less than 50,000 square feet and there's a strong demand."
CB Richard Ellis' Darla Longo and Barbara Emmons, who represented both the buyer and the seller on the deal, declined to comment on the transaction.
The second tightest office space submarket in the county continues to attract Pacific Real Estate Group.
The Santa Barbara-based firm purchased the Wing Office Park and the Wing Business Park on Paramount Boulevard in Lakewood for $12.3 million. The combined properties, which include tenants such as the Federal Aviation Administration, Rolls-Royce North America and Federal Express, consist of two office buildings and one flex building and total 129,000 square feet.
The transaction marks Pacific Real Estate Group's second purchase of commercial space in the Long Beach Suburban Market in a little over a year, according to Cushman & Wakefield Inc.'s Robert Garey, who, with Robert Alperin and Kimball Wasick, represented both the buyer and the seller in the deal.
"You're at the mid point between LAX and John Wayne Airport," said Garey of the property's locale. "So you can service both markets very conveniently from the Long Beach Airport area."
As a result, the vacancy rate for Long Beach Suburban was 10.6 percent in the first quarter, according to Grubb & Ellis. Only Brentwood, at 10.5 percent, had a tighter office market.
Staff reporter Danny King can be reached at (323) 549-5225 ext. 230, or at firstname.lastname@example.org.
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