The two distinct components of the Wilshire Corridor submarket each showed signs of tightening in the third quarter, but some slack remained.
In the Miracle Mile/Park Mile area, lease velocity picked up with a rash of renewals and signings. New housing and retail amenities nearby attracted companies to relocate there.
Asking rates on Class-A space rose to $2.23 in the third quarter from $2.14 in the previous three months and $2.05 in the third quarter of 2003, according to Grubb & Ellis Co.
Still, landlords were willing to cut deals to keep tenants in place and lure new ones, and effective rates varied widely. Net absorption was positive at 1,454 square feet for the third quarter but year-to-date remains at negative 46,177 square feet.
Transactions were a factor in the Miracle Mile/Park Mile market.
Tishman Speyer Properties closed escrow on the 370,000-square-foot building at 6300 Wilshire Blvd. for $75 million, or $202 per square foot, and raised asking rates.
In anticipation of their sale of 5670 Wilshire Blvd., J.H. Snyder Co. and Goldrich & Kest Industries LLC also upped asking rates. The building is expected to move for as much as $110 million.
The busiest building was 6500 Wilshire Blvd. There, two subsidiaries of public relations firm Publicis Groupe SA renewed for 32,000 square feet. The $11-million transaction will keep Manning Selvage & Lee and Mediavest Worldwide for more than 10 years. Cedars-Sinai Medical Center leased 19,932 square feet in a 36-month deal at an effective rate of $2.45 per square foot and sublet 10,609 square feet in a 40-month deal at an effective rate of $1.50 per square foot.
Elsewhere in the market, software developer Mitratech sublet 27,894 square feet from California National Bank at 5900 Wilshire Blvd. The 60-month sublease had an effective rate of $1.35 per square foot. Launchpad Communications sublet 33,000 square feet at 5757 Wilshire Blvd. in a 38-month lease at $1.40 per square foot; and Graham Silberg and Sugarman Inc. renewed at 5055 Wilshire Blvd. for 6,489 square feet. The 48-month lease is priced at $1.85 per square foot.
Despite this activity, Class-A vacancies remained virtually unchanged, dipping to 16.7 percent in the third quarter from 16.8 percent in the second. The rate has hovered in the 16 percent range for over a year.
"There's not that many good-sized blocks of space available in Park Mile," said Rob Waller, first vice president at CB Richard Ellis. "So there really hasn't been that much movement there." That's driven larger tenants to Miracle Mile, where there are more large footprints to be had, he said.
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