Gains in Santa Monica, West L.A. and the Culver City/Marina markets helped pull Westside vacancies down to 15.5 percent, according to Grubb & Ellis Co., more than a point lower than the April-June quarter.
Third quarter activity was especially brisk in the submarket's Class-A buildings, where 13 significant new leases and renewals contributed to an increase in net absorption of almost 400,000 square feet.
The overall performance masked declines in two of the submarket's traditionally strong pockets: Beverly Hills, where the vacancy rate rose to 13.4 percent from 11.9 percent in the prior period, and Century City, where the vacancy rate hit 18.7 percent, a percentage point above the second-quarter rate and 3.3 percent higher than the year-ago period.
The reduction in available space did little to stem an ongoing decline in average asking rates, which stood at $2.66 for the July-September period from $2.68 in the second quarter.
The biggest declines were in Beverly Hills and Century City, where Class-A asking rates have skidded 13 cents in the last year.
Even with Century City's asking rents at $3.01 per foot per month, down from $3.14 in the year-earlier quarter, the address is so desirable that third-quarter asking rates for Class-B space $2.87 per square foot are higher than the average asking rates for Class-A space in five other Westside office enclaves.
But the market remains in flux. Though the recently opened MGM Tower added a great deal of space to the market, its namesake tenant is in the midst of being acquired by Sony Corp. At the same time, the expected influx of entertainment companies after talent agency Creative Artists Agency agreed to anchor a new tower at 2000 Avenue of the Stars in a $150 million deal earlier this year has failed to materialize.
"The prediction of a dramatic inflow is premature," said Neil Resnick, senior vice president and director at Grubb & Ellis.
Asking rents in Santa Monica dropped, perhaps spurring a decline in vacancies to 13.9 percent from the 16.3 percent reported in the previous three months.
"Santa Monica languished for so long after the dot-com bust," said Eric Olofson, a managing broker with Cushman & Wakefield Inc. "As the economy gradually improves, what made it hot in the first place is prompting tenants to focus on quality of life again."
In one of the largest deals in the county, Equity Office Properties Trust and pension fund TIAA-CREF purchased the 1.1-million-square-foot Colorado Center for $443.6 million from Tishman Speyer Properties Inc. about $75 million more than Tishman paid for it in 2000.
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