Just three years ago, the Westside vacancy rate stood at 15.3 percent and landlords were giving away office space at $2.66 per square foot.
Today, vacancies are at a paltry 7.3 percent and average asking rates are a whopping $4.50 per square foot, according to figures from Grubb & Ellis Co.
"Unabated tenant demand over the last five consecutive quarters coupled with the lack of new development has led to historically low availabilities," said Lisa St. John, managing director for Jones Lang LaSalle.
That also means fewer leases are being completed, though a number of buildings still traded hands in the third quarter with both owner-occupiers and investors making the deals.
The tightest market is Beverly Hills; it has a 3.7 percent vacancy rate, the second lowest in the county, with Class A asking rates up 39 cents to $4.26 per square foot since second quarter. The most expensive market is Santa Monica, which despite a higher, 7 percent vacancy rate, has a nosebleed-inducing average asking rate of $5.96 per square foot.
Meanwhile, Westwood saw the biggest increase in its asking rents, leaping to $5.60 per square foot in the third quarter from $4.51 at mid-year. As in Pasadena, the precipitous rise is attributable to private equity firm Blackstone Group, which is raising rents at the local properties it now owns after buying out Sam Zell's Equity Office Properties for $23 billion.
"Blackstone has singularly been pushing rents," said Neil Resnick, executive vice president of transaction services for Grubb & Ellis. "Some tenants are already reacting to the sticker shockand considering other markets."
- Online ad sales agency Gorilla Nation Media LLC sublet 24,478 square feet from BAE Systems Control at Wateridge Two, 5140 W. Goldleaf Circle, in Culver City. Terms were not disclosed.
- Dick Clark Productions signed a five-year lease for 27,873 square feet at 2900 W. Olympic Blvd. in Los Angeles at undisclosed terms.
- Ares Management and Canyon Partners each signed 10-year leases for 70,000 square feet at 2000 Avenue of the Stars in Century City. Terms were not disclosed.
- First Federal Bank of California took a 12-year lease for the entire 89,219-square-foot building at 12555 Jefferson Blvd. in Playa Vista, and another 32,000 square feet at 5800 Hannum Ave. for 12 years in Culver City. Financial terms weren't reported.
- US Property Fund III GMBH & Co. KG, a German investment company, sold the 310,798-square-foot MTV office building at 2600-2800 Colorado Ave. in Santa Monica to M. David Paul & Associates for $217 million.
- A private trust purchased Edgemar Center, a mixed-use development at 2415-2449 Main St. in Santa Monica, for $19 million from another private trust. The Frank Gehry-designed center was fully leased with retail and office tenants.
- Cabi Developers acquired the following Class B properties from Arden Realty as part of a 33-property portfolio sale: a 105,700-square-foot building at 1950 Sawtelle Blvd. for about $19.5 million; a 146,840-square-foot building at 6167 Bristol Parkway for about $31.8 million; and the 146,800-square-foot Carlsberg Corporate Center at 2800 28th St. for about $55 million.
Margot Carmichael Lester
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