Under Construction: 963,000 square feet
Class A Asking Rents: $2.65
Here are some eye-popping numbers: Class A asking rents jump 60 cents, from $2.86 to $3.46 per foot, and vacancies drop, from an already record 2.9 percent in the last quarter, to 2.3 percent.
No, they're not a landlord's winning Lotto ticket. They're first quarter office stats for the East San Fernando Valley, as reported by Grubb & Ellis, Co.
In a submarket that boasts less than 67,000 square feet of vacant space, any type of percentage bump feels titanic. That's what happened when rents at 10 Universal City Plaza, bought by New York-based Broadway Partners in December, shot up past $3.75 per square foot and pushed the average in the East Valley to record highs.
Meanwhile, commercial rents were up by 16 cents to $2.65 per square foot across the Valley, due to a gang of buyers chasing product. Despite a mostly meager inventory, demand was sky-high. Investors looking anywhere along Ventura Boulevard from Encino east through Studio City had to cough up more than $300 per square foot to buy a Class A product.
"The upside in rents is clearly driving sales demand," notes Trevor Belden, Principal with Lee & Associates in Sherman Oaks. "Buyers are willing to pay a lower cap rate for quality product, which means a higher price per foot, because they can take advantage of the rollover in vacancies, and raise rents."
Tenant movement in parts of the Valley was so brisk that landlords still managed to derive benefits from firms bailing out. Agoura Hills-based home lender Ownit Mortgage Solutions Inc. defaulted on 12,000 square feet in the Academy Tower, 5200 Lankershim Blvd. in North Hollywood, and the space was immediately filled by a film/TV post-production group for five years at 25 cents more per square foot. Migration of entertainment firms from nearby Burbank, where rentals were 60 cents higher on average, has flooded the Academy Tower with 30,000 square feet of new tenancy since December.
-TR Funding of Conejo Valley sold off a new two-building Class A office parcel at 30077-30101 Agoura Court in Agoura Hills. The Klein Family Trust of Brentwood snapped up the 110,000 square foot Village Corporate Center in a deal said to be worth a little over $200 per square foot, or roughly $22 million.
-Five Guys Named Moe, Inc., a post-production group that has created promos for "The Sopranos and "The West Wing," moved into a 12,000 square-foot space formerly occupied by Ownit Mortgage Solutions Inc. of Agoura Hills, at 5200 Lankershim Blvd. in North Hollywood. The terms with landlord Academy Investors LP were $2.40 per square foot for five years with annual rental increases of 3 percent. Tenant improvement allowance was set at $15 per square foot.
-Arden Realty's Noble Professional Center, at 15060 Ventura Blvd. in Sherman Oaks, went on the market for what brokers estimate will fetch approximately $20 million. The 51,828 square foot Class A "low-rise" features 13,000 square foot floor plates.
-Software firm Intuit Inc. leased 170,000 square feet one of two new 255,000 square foot buildings under construction at LNR Warner Center in Woodland Hills. The 10-year lease was valued at $70 million. Occupancy is slated for spring 2008.
-S & V; Van Nuys LLC sold a 16,168 square foot building at 14250 Arminta St. in Panorama City to MDL Real Estate Holdings LLC for close to the asking price of $211 per square foot.
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