The Wilshire Corridor is a tale of two neighborhoods.
Stretching from west of downtown to Beverly Hills, the area saw its office vacancy rate drop more than a point, to 9.2 percent in the third quarter.
But that doesn't necessarily translate into high leasing rates. Wilshire Corridor properties had average asking rates of $2.03 per square foot for Class-A space and $1.44 for Class-B. Only the South Bay posted lower figures, according to Grubb & Ellis Co.
While the Miracle Mile/Park Mile segment of the area is benefiting from the tighter market in nearby Beverly Hills and surrounding neighborhoods, the Wilshire Center area closer to downtown continues to lag, even though its vacancy rate is 8 percent. Packed with small professional offices, government agencies and other low-rent tenants, its asking rents inched up just a penny to $1.47 the lowest in the county dragging down the Miracle Mile's overall $2.34 figure.
"(Miracle Mile/Park Mile) is very desirable now because of the Grove and the residential development," says Dick Schell of Colliers-Seeley International. "It's looking very good."
The biggest newsmaker for the area was CNN, which is negotiating to relocate its Hollywood bureau to 6500 Wilshire Blvd. in a 40,000-square-foot, 15-year deal at an average rent of about $3 per square foot. Also, the public relations and marketing firm Laufer Green Isaac Inc. leased 5,500 square feet at 4221 Wilshire Blvd. for five years at undisclosed terms, while Petry Television took 14,000 square feet lease at 6380 Wilshire Blvd. at an unreported rate.
These deals helped the area absorb nearly 112,000 square feet of space in the quarter, continuing a trend that began early last year as tenants have moved into the neighborhood. However, that has not resulted in many properties changing hands as current landowners hold out for a bigger rise in leasing rates.
"Miracle Mile has experienced some investor activity, but most of the landlords are looking to hold properties and slowly raise rental rates as the market improves," said Chris Runyen, senior managing director for Charles Dunn Co. Inc.
The largest sale was at Wilshire Courtyard, where Stockbridge Capital Partners Inc. unloaded its roughly 95 percent stake for $360 million to German fund manager RREEF Funds LLC. McCarthy Cook & Co., the minority owner of both buildings there, retains its interest and continues managing the offices.
The complex at 5700-5750 Wilshire Blvd. also saw mortgage lender ResMAE take 11,072 square feet, with Miramax Film Corp. said to be in negotiations for 10,000 to 15,000 square feet there as well.
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