Smaller Transactions Make Up For Slowdown in Large Leases
By MATT MYERHOFF
While the third quarter Hollywood/ West Hollywood vacancy rate was essentially unchanged from the previous three months, some small but significant deals indicated positive momentum for the market.
The vacancy rate for the July-September period was 19.7 percent, compared with 19.8 percent in the preceding three months and 23.4 percent for the like period a year earlier, according to Grubb & Ellis Co.
The average asking rate for Hollywood and West Hollywood Class-A office space was $2.33 a square foot, a penny less than the previous quarter and 15 cents lower than the year ago period.
The pace of big leases set in the April-June period didn't keep up in the last quarter, but there were still many smaller deals.
CIM Group was at the center of much of the area's leasing activity in the period, closing a five-year lease with Bodies in Motion for 26,000 square feet in its long-dormant Hollywood Galaxy building at 7021 Hollywood Blvd.
Bruce Gordon, president and chief executive of the fitness center chain, said it has between 3,000 and 4,000 members in the vicinity.
"The city is taking a much-needed business friendly approach to returning some of the glory back to Hollywood," Gordon said.
CIM also closed leases in the third quarter with new bars Mood and Boulevard that are located in a string of single-story retail buildings it owns between 6611 and 6637 Hollywood Blvd. near Cherokee Avenue, said CIM Project Manager Ryan Harter. Mood, in a 4,000 square-foot spot, and Boulevard, in 6,000 square feet, have conditional use permits under review and are expected to open in early summer 2004.
Second quarter deals such as the lease by Gemstar-TV Guide International Inc. for 60,000 square feet at CIM Group's building at 6922 Hollywood Blvd., and American Musical and Dramatic Academy's purchase of four buildings totaling 50,000 square feet at 6301 Yucca St. had a positive impact on the absorption rate in the third quarter.
Net absorption the amount of newly leased space minus vacated space was at positive 788 square feet in the third quarter compared with negative 33,185 square feet in the second.
In the more solidly established office market of West Hollywood, activity along Sunset Boulevard kept things moving.
Apollo Real Estate Partners' Sunset Millennium project at 8560 Sunset Blvd., signed residential real estate brokerage Keller Williams Realty to a 5-year lease of 14,000 square feet on two floors of the former Playboy Building, said Chris Dumont, a senior vice president at Grubb & Ellis who represented Keller Williams in the deal.
Apollo will move its own offices to the 71,000-square-foot building's second floor.
Furniture manufacturing giant Herman Miller Workplace Resource Inc. has a deal to lease 7,500 square feet on the building's vacant fifth floor, and plans to move its marketing and sales offices from a larger space at 6310 San Vicente Blvd. by December, said Dennis Bowman, a vice president at CB Richard Ellis representing Herman Miller.
A block to the east, Gold Mountain Enterprises, owner of the site at 8340 Sunset Blvd. that includes the House of Blues, secured a loan in the third quarter, part of which will be used for redevelopment of the site, said Gold Mountain spokesman Ira Handelman.
Gold Mountain's plans to build condominiums and 30,000 square feet of retail space is under review by West Hollywood.
Developer Richard Weintraub's American Glendale Inc. bought the building at 9040 Sunset Blvd. that once housed Scandia Restaurant from Hard Rock Caf & #233; founder Peter Morton. West Hollywood is considering his application for the development of the 1.1 acre-site for restaurant, retail and condominiums or loft apartments uses.
Weintraub is asking about $5 per square foot for the 15,000 square feet of retail space and about $2.50 for the 7,000 square feet of office space in the proposed project.
- Bodies in Motion signed a five-year lease for 26,000 square feet in CIM Group's Hollywood Galaxy building.
- Twentieth Television signed a 10-year lease for 15,000 square feet of TV and radio studios in Hollywood & Highland, bringing the mall to 88 percent occupancy.
- Keller Williams Realty signed a five-year lease for 14,000 square feet at Apollo Real Estate Partners' Sunset Millennium project.
- CIM closed leases with bars Mood, in 4,000 square feet, and Boulevard, in 6,000 square feet, both on Hollywood Boulevard near Cherokee Avenue.
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