Office rents shot up again last quarter in Hollywood and West Hollywood as the market had little available product to offer.

The April-June period ended with Class A rents up 10 percent to $3.55, compared with $2.99 during the second quarter of 2006, according to Grubb & Ellis Co.

“It’s a very tight market and landlords are ratcheting up rents,” said Steve Kolsky, managing principal, Newmark Knight Frank. “People are either staying and paying, or they’re leaving.”

Some firms are choosing to move south to the El Segundo or LAX markets where it’s not only easier to find larger blocks of office space, but rents are lower, according to Kolsky. Not all tenants have that option, however.

“There have been a lot of creative companies that have moved south, but it depends on their business. If they’re tied to the studios or the agencies or the management companies they need to be in either Hollywood, the Westside or Burbank,” he said.

Vacancy rates were up nearly half a point to 5.4 percent last quarter, still far lower than L.A. County’s average vacancy rate of 9.5 percent.

Though the majority of the market’s deals were relatively small transactions involving less than 10,000 square feet of office space, the whopper of the quarter was Hudson Capital’s purchasedSunset Gower Studio for $200 million.

Meanwhile, West Hollywood’s retail market sizzled as retail rents on trendy Robertson Boulevard pushed $20 per square foot for stores under 1,500 square feet. Many new tenants are willing to meet the escalating rents in exchange for opening up on what’s become the area’s hottest shopping street.

MAIN EVENTS


– Commercial real estate firm Hudson Capital purchased the 16-acre Sunset Gower Studios in Hollywood for $200 million. Hudson has not yet announced its plans for the property, but it is expected the firm will seek to build offices on part of the site.

– Universal Fellowship of Metropolitan Community Churches sold a five-story office property in West Hollywood to partnership W-Holly LP for $14 million. The property at 8704-8714 Santa Monica Blvd. totals 28,207 square feet.

– Force-LDMB LLC purchased 6715 W. Sunset Blvd. and a parking lot at 1524 N. Las Palmas Ave. from Arthur M. Kassel Trust for $11.6 million. The two-story office building is 25,535 square feet and is occupied by LA Weekly.

– International Hotel Associates 7 bought the 50-room Elan Hotel Modern in West Hollywood for just over $10 million. Beverly Croft Towers LLC sold the property.

– At 9229 W. Sunset Blvd., CMG Worldwide, an intellectual property rights management company, signed a two-year sublease to take 2,100 square feet of office space from advertising agency Destination Marketing for approximately $2.85 per square foot.

– New media firm Live Universe leased 7,000 square feet of office space for three years at 9255 W. Sunset Blvd. in West Hollywood. Landlord Sunset Sierra Properties leased the property for approximately $2 per square foot.

– Entertainment firm Bauer Martinez subleased 3,990 square feet of space at 8349 W. Sunset Blvd. for three years from Miramax. Financial details were not disclosed.

Office Market at a Glance



Inventory:

3.9 million square feet


Under Construction:

400,000 square feet


Class A Asking Rents:

$3.55