It could have been worse.
That was the feeling across the San Fernando Valley as the quarter ended; the office market only gave back a fraction of its space amid a one-point rise in vacancies to 13.2 percent.
In particular, the vulnerable West Valley was holding up, with rents holding steady at $2.66 per square foot, according to Grubb & Ellis Co. But nervous brokers are wondering if Wall Street fallout will soon dampen the otherwise good news.
Washington Mutual, Countrywide Financial and American International Group, all victims of the economic crisis, have significant operations in the West Valley, causing brokers to worry that they could cough up significant space.
"Everybody's nervous, nobody wants to be making large decisions right now," said Jim Lindvall, a managing director with Jones Lang LaSalle Americas Inc.
Insurance giant AIG, whose need for a federal bailout shocked the world economy, leases about 500,000 square feet, much of it concentrated in Warner Center. And Washington Mutual, now owned by JPMorgan Chase, has about 600,000 square feet mostly in the Chatsworth area, Lindvall said.
Both pale in comparison to Countrywide, which was bought by Bank of America and has several million square feet spread out from the northwest Valley to Calabasas and Thousand Oaks.
"Now, people are scratching their heads and wondering what the next shoe will be to fall," Lindvall said.
In comparison, the East Valley, which has more entertainment companies, was fairly stable with a relatively low vacancy rate of 8 percent.
But sublease space has crept on the market in places like Studio City, North Hollywood and Sherman Oaks, said Trevor Belden, principal with Lee & Associates. The East Valley market gave back almost 15,000 square feet and Class A asking rents dropped 12 cents to $3.57 a square foot.
"It's faring well, but I expect to see more sublease space coming onto the market over the next couple quarters," Belden said.
- Intuit Inc. leased all of the first four floors of the Warner Center a total of 167,430 square feet at 21215 Burbank Blvd. in Woodland Hills. The deal consideration was approximately $65 million. A software company known for developing Quicken and TurboTax, Intuit is relocating from an office in Calabasas, and plans to build a data center, employee cafeteria and a gym with an outdoor basketball court.
- Chimera Design LLC, a design and entertainment development company, signed a five-year lease for 16,000 square feet at 15490 Ventura Blvd. in Sherman Oaks. The lease with building owner Drisson Corp. is valued at $2.5 million, according to a source. Chimera, previously located in Santa Monica, moved into the penthouse of the three-story building, where Morgan Stanley was once the tenant.
- Vivendi Universal Entertainment signed a five-year lease for a 107,696-square-foot of office space at 10 Universal City Plaza in Universal City. The landlord is Tenucp Property LLC. Terms of the deal were not disclosed.
- Cornerstone Real Estate Advisors LLC, a real estate investment firm headquartered in Hartford, Conn., bought an industrial warehouse at Arroyo Avenue and Eighth Street in the city of San Fernando. The seller of the 590,570-square-foot property was ING Clarion. The price of the deal was not disclosed.
Office Market At a Glance
Inventory: 28 million square feet
Under Construction: 215,000 square feet
Asking Rents: $2.80
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