Technology companies putting down roots in the entertainment world helped push the Westside vacancy rate below 10 percent for the first time in years.
Third quarter vacancies in the submarket that includes Santa Monica and Beverly Hills fell to 9.8 percent from 15.3 percent for the like period a year earlier, according to Grubb & Ellis Co.
"New life is being breathed into the Westside markets by synergies between high-tech and entertainment," said Neil Resnick, executive vice president and managing director for Grubb & Ellis.
Web portals, in particular, consider creative and entertainment content a major part of the future, Resnick said. "The advances in broadband are leading to deeper relationships with entertainment firms."
In Santa Monica, vacancy rates fell to 7.6 percent from 7.8 percent in the second quarter and 13.9 percent a year earlier, while asking rents rose 12 cents sequentially to $3.49 a foot, 45 cents higher than rents one year earlier.
Yahoo Inc. nearly doubled its footprint at the former Colorado Center, subleasing 150,000 square feet formerly occupied by Metro-Goldwyn-Meyer Inc. and taking an additional 64,000 square feet in an $80-million deal. This is on top of the 256,000 square feet that the company leased there earlier this year and brings its total footprint to 470,000 square feet, more than 40 percent of the entire property.
Two deals are pending in Beverly Hills. America Online Inc. is negotiating to lease 60,000 square feet at 331 N. Maple Drive and Fox Sports Interactive is looking to lease the 160,000-square-foot building at 407 Maple Drive from new landlord Tishman Speyer Properties LP.
Tishman purchased the property, which has never been occupied, for $71 million from a partnership that includes David Geffen and Dr. Bernard Salick. "At $443.75 per square foot, that's a big number for an empty building," said Mike DeSantis, senior director with Cushman & Wakefield Inc.
Salick also sold the near-empty Columbia Savings & Loan building at 8900 Wilshire Blvd. for $13 million. Global Five Associates paid $401 per square foot for the 32,400-square-foot building.
The tighter market makes it easier for new landlords to command higher rents. Average asking rents for Beverly Hills Class-A buildings reached $2.89 in the third quarter, up from $2.80 in the second quarter and $2.78 a year earlier.
The trend holds for the Westside as a whole, where third-quarter asking rents rose to $2.88 a square foot on Class-A space from $2.68 a year earlier.
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