It was the same old song and dance up and down the Wilshire Corridor at the start of 2008, as leasing and occupancy rates remained strong despite slowing elsewhere.
Vacancies remained at 8.1 percent, the same as at year’s end and 12 months ago, according to Grubb & Ellis Co. The average asking rate rose 14 percent since a year ago, with Class A rates beginning the period at $2.81 per square foot.
“Past momentum demand has driven rates up,” explained J.C. Casillas, Grubb & Ellis’ client services manager for the L.A. metro and South Bay markets. “If you look at the rate of increase over the prior year for almost every quarter over the past year, those were consistently double-digit increases.”
That’s most true for Miracle Mile-Park Mile, where average asking rates rose to $3.49 in the opening quarter from $3.36 per square foot at year’s end. “The cost of occupancy in the area has increased a lot in the past year,” noted Chris Runyen, senior managing director at Charles Dunn Co. Inc.
That’s resulting in some unexpected departures from both Miracle Mile-Park Mile and its less pricey neighbor Wilshire Center. Traditionally, these markets attracted tenants who wanted the proximity to the adjacent high-rent areas without the hefty price tags. But five years of steadily rising rents may have taken its toll.
A few big companies left Wilshire Corridor in the first quarter. The most notable was architectural firm Harley Ellis Devereaux, which moved downtown and out of 5150 Wilshire Blvd. Downtown landlords were asking only $3.14 per square foot.
Office Market At a Glance
Inventory: 14 million square feet
Under Construction: 0
Class A Asking Rents: $2.81
MAIN EVENT
– The Frank D. Lanterman Regional Center extended its lease at 3303 Wilshire Blvd. and expanded to a total of 61,000 square feet in a 10-year deal worth approximately $11 million.
– Jamison Services Inc. continued to acquire properties in the Wilshire Center submarket, acquiring the 203,000-square-foot office building at 3424 Wilshire Blvd. from the Roman Catholic Archdiocese of Los Angeles for $31 million. The sale-leaseback transaction has the Archdiocese taking 57,000 square feet for five years. Jamison’s portfolio includes more than 22 million square feet in L.A. County.
– Software company Passenger took an entire 15,000-square-foot floor at 5900 Wilshire Blvd. to make room for its expanding staff, which it plans to double in the next 12 months. The law firm of Abrams Garfinkel Margolis Bergson signed for 6,500 square feet and Luxottica Group, designers and manufacturers of prescription frames and sunglasses, took 4,143 square feet.
– Two companies will relocate to 5900 Wilshire Blvd. Global PR giant Edelman leased 30,032 square feet and will relocate from its current location in the 5670 Wilshire Blvd. building. Keller Williams Realty will vacate 4465 Wilshire Blvd. for 6,500 square feet of space.
– The Scottish Rite Center and Cathedral at 4371 Wilshire Blvd. was put on the market in March. The 89,768-square-foot building at Plymouth Blvd. has no asking price, but offers were being taken through April 18.
