The San Fernando Valley office market remained one of the healthiest in L.A. County during the third quarter, with vacancies flat at 10 percent and the area continuing to draw new tenants. Investment activity remained brisk.
Asking rates on Class-A office space rose slightly, to $2.15 a square foot from $2.14. In the year-ago third quarter, Valley-wide rents were $2.18, according to Grubb & Ellis Co.
Net absorption was positive for the seventh straight quarter, although it fell by nearly 80 percent from the 314,509 square feet absorbed in the second quarter.
Jim Lindvall, senior vice president of the office division for Grubb & Ellis, characterized the Valley market as solid. “It has a diverse base of tenants and isn’t leveraged on any one industry,” he said.
Filling up the most empty space was the East Valley market, where 61,017 square feet were absorbed in the third quarter and the vacancy rate fell to 11.5 percent from 13.6 percent in the second quarter.
Class-A asking rents fell sequentially to $2.55 a square foot in the third quarter from $2.56, and were well below the $2.71 being asked one year ago.
In the larger Central Valley submarket, which includes the Ventura Boulevard corridor of Encino and Sherman Oaks, net absorption in the third quarter was 2,857 square feet, compared with 33,345 square feet the previous quarter.
The area’s vacancy rate remained the lowest in the Valley at 8.8 percent, unchanged from the second quarter and down from 10.8 percent a year ago.
Rent for Class-A buildings held steady sequentially at $2.03 per square foot for the third quarter, but was down 3 cents from the year-ago quarter. Class-B rents fell to $1.94 per square foot from $1.99 in the previous quarter and $2.00 a year earlier.
With fewer vacancies, though, landlords aren’t as willing to give valuable incentives to new tenants, said John Sabourin, corporate managing director for Studley.
“There’s less free rent and fewer concessions being offered,” said Sabourin. “It’s a healthy market.”
Boston-based pension adviser TA Associates agreed to purchase the Encino Executive Center at 16027 W. Ventura Blvd. for $21.8 million from Brentwood-based seller Commercial Ventures Inc.
The West Valley also posted a significant decline in net absorption, which remained positive at 5,156 square feet in the third quarter but fell dramatically from 199,274 square feet absorbed in the previous quarter.
Vacancies fell slightly to 10.4 percent from 10.6 percent in the previous three months, while asking rates on Class-A space nudged up slightly to $2.15 per square foot from $2.13.
In Warner Center at 21301 Burbank Blvd., Internet service provider United Online Inc. leased 111,000 square feet, moving its headquarters in August from a Westlake Village space that was about half the size.
At Warner Center Business Park, Scanlon Guerra Jacobsen & Burke Insurance Brokers moved its risk assessment business to a 22,385 square foot building at 21011 Warner Center Lane. The firm moved from a smaller space on Erwin Street.
Warner Center Tower I at 21600 Oxnard St. secured a 51,665 square foot lease with tenant USI Holdings Inc. in a six-year deal. The lease brought the vacancy level in the building, which was 85 percent empty in 2003, below 50 percent.
Also, Jamison Properties paid $18.5 million to Portland, Ore.-based ScanlanKemperBard Cos. for the 126,000-square-foot Warner Atrium in Woodland Hills.
And Ownit Mortgage Solutions sublet 50,000 square feet from Spirent Communications Inc. at 27349 Agoura Road, relocating from Woodland Hills.
The West Valley market had 179,336 square feet under construction in the third quarter, comprised mainly of LNR Warner Center buildings at Canoga Avenue and Burbank Boulevard. The Conejo Valley, which includes parts of Ventura County, had more than 100,000 square feet of new buildings under way.
