Office Market At a Glance
Inventory:
13.6 million square feet
Under Construction:
0
Class A Asking Rents:
$2.47
Low vacancy rates and a strong local economy continued to push rents higher across all classes of office buildings lining Wilshire Boulevard from downtown to Beverly Hills.
Vacancy rates have stayed in the 8 percent range over the last four quarters, allowing owners to raise asking rates 30 cents to $2.47 per square foot for Class-A space and 16 cents to $1.49 per square foot for Class-B, according to figures from Grubb & Ellis Co.
“The vacancy rates along the Wilshire Corridor have been steadily decreasing over the years, and the relative increases in rents are long overdue,” says Chris Runyen, senior managing director of Lee & Associates.
Landlords are getting an assist from adjacent markets that are tightening. Beverly Hills and West Hollywood have few vacancies, and downtown mostly has larger blocks of space. Many traditional Wilshire Corridor tenants favor smaller footprints and affordable prices. The $2.94 per square foot being asked in Miracle Mile/Park Mile and the $1.74 in Wilshire Center are hard to beat, especially for tenants wanting to be near downtown or the Westside.
“They’re ratcheting up rates because everyone else is,” noted Guy Eisner, associate vice president for Grubb & Ellis. “Landlords aren’t giving a lot of improvements, and they’re pushing for five-year terms. If tenants balk, landlords just wait for the next prospect.”
Existing tenants should act fast to lock in favorable rates, Runyen says. “Tenants will want to negotiate lease terms before rates go up any further, so we will see many tenants trying to renew their leases well before they expire as the year goes on.”
MAIN EVENTS
-Tax negotiation specialists Associated Tax Relief leased approximately 7,300 square feet at 3303 Wilshire Blvd. from United Teachers of Los Angeles for eight years at $1.1 million.
-Wishlab 90 LLC received $66.5 million for a 3.3-acre parcel at 5220 Wilshire Blvd., between La Brea and Sycamore avenues, from BRE Properties. BRE has proposed a $352-million residential-retail development for the site, slated to go online late next year.
-Los Angeles-based Ratkovich Co. is spending $28 million to upgrade the infrastructure of 5900 Wilshire Blvd. to Class-A levels. It also is building a $7 million restaurant pavilion and gateway at the corner Ogden Drive. The company purchased the 32-story tower in December 2005.
-2465 Fruitland Avenue LLC, an affiliate of Cohen Asset Management, bought the 62,000-square-foot two-building office complex at 2601 Wilshire Blvd. from S & R; Wilshire LLC for undisclosed terms. The building is 100 percent occupied by the County of Los Angeles Department of Public Social Services on a long-term lease.
-The Mercury, a 23-story residential development at the corner of Wilshire Boulevard and Western Avenue, was completed. The Koreatown building features luxury condos that top out at $1 million and include smoking patios.
-Land developer Kor Group will vacate its space at 5750 Wilshire Blvd., for an office building it owns downtown.
