Wilshire Vacancies Decline; Market Becomes Alternative
By BENJAMIN MARK COLE
The Wilshire Center office district, which in recent years has become a budget-minded alternative to pricey Westside office warrens, saw rents and vacancy rates slide in the first quarter.
The lure of Wilshire Center as a bargain location continued in the first quarter. Vacancy rates were 13.4 percent, compared with 15.1 percent in the previous quarter and 16.5 percent in the year-earlier period, according to Grubb & Ellis Co.
Good quality space in the corridor leased for $1.30 a square foot per month in the first quarter, according to Grubb & Ellis. That's off from $1.32 in the previous quarter and $1.40 a square foot in the like period a year earlier.
By way of comparison, similar space downtown is going for more than $2.30 a square foot, while direct Westside rents are still in the $3 range.
Long considered the poor relation to the sexier Westside, Wilshire Center now sports lower vacancy rates than many West Los Angeles submarkets.
"Back in the mid-1990s, we were seeing vacancy rates of 30 and 35 percent in Mid-Wilshire," said Chris Runyen, vice president and broker with Grubb & Ellis. "Since then, it has come down every quarter except one. Slowly, but it continues to come down."
Los Angeles real estate developer Jerry Snyder, senior partner at J.H. Snyder Co., said the first quarter showed increased activity, even when compared to a strong 2001. Snyder owns the Wilshire Courtyard at 5700-50 Wilshire Blvd. and the Museum Square Building across the street at 5757 Wilshire Blvd.
"We have about 1 million square feet in those two buildings, and only about 100,000 square feet is not occupied. We are very busy, and I expect to fill up the space this year, if not this quarter," he said.
Snyder, who owns an empty lot on the corner of Masselin Avenue and Wilshire Boulevard, said he turned down multiple offers in the first quarter to sell the vacant land.
"I have plans to build a 70,000-square-foot building on the site, but I am just waiting to find a single tenant (to lease the whole building)," he said. "But the offers are out there."
Among the deals made in the first quarter: architectural firm Artiplan leased 19,000 square feet at 3287 Wilshire Blvd., in a four-year sublease from City National Bank. The lease rate is 80 cents a square foot per month, but Artiplan will make $600,000 in improvements on its own, raising the effective lease rate to about $1.50 a square foot.
Hachette Filipacchi Media, a global magazine publisher, renewed and expanded its lease at 5670 Wilshire Blvd. The company increased its space from 10,000 to 12,500 square feet in a five-year, $1.6 million deal.
The market, Snyder said, will be bolstered by the opening of The Grove, a 575,000-square-foot shopping and entertainment complex next to the long-established Farmer's Market at Third Street and Fairfax Avenue.
East of Museum Row along Wilshire, Jamison Properties Inc. principal Dr. David Lee remains a major force in the office market, and is said to command 90 percent of available space. In the first quarter, he ventured off Wilshire Boulevard by a block, buying a 75,000-square-foot office building at 3550 W. 6th St. for $4 million.
Lee, who owns more than 7 million square feet of space in Koreatown, is able to rent space at below market rates of $1 a square foot because he purchased many of his buildings at discount prices in the mid-1990s.
Lee and other investors are in some ways prospecting atop public transportation Wilshire Boulevard has subway stops at Alvarado Street, Normandie Avenue, Western Avenue and Vermont Streets. No other part of town is so connected to the subway system.
"As roadways become more clogged, those office markets with access to public transportation be it downtown, or along the subway, stand to benefit," said Dan Rosenfeld, principle at downtown-based Urban Partners, and an expert on urban land use.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Handful of Large Deals Keeps Market in Positive Territory
- Refugees From Tighter Markets Fill in Empty Space Along Strip
- Market Tightens, but Landlords Still Making Deals for Tenants
- WILSHIRE---Tenants Finding Bargains at East End of Wilshire Market
- Increased Vacancies Create Bargain Hunter Opportunity
- Strength of East Side Lifting Struggling Leasing Market
- Tale of Two Markets: Bustling Interior Outstrips Western End