Southern California may be experiencing a winter drought, but that’s not something you have to tell San Fernando Valley brokers, who experienced yet another quarter of rising vacancies as more space hit the careening office market.
Nearly 550,000 square feet of space was dumped back into the base, according to Grubb & Ellis Co., while vacancies in a formerly sizzling submarket such as the West Valley spiked nearly six percentage points to 18.9 percent since the same time last year.
“Even the best chunks of space are getting tripped up in this market,” noted Cushman & Wakefield broker Matthew Hargrove. “We recently subleased 13,000 square feet … for nearly a dollar a foot less than when it was first listed two years ago.”
In fact, the only Valley renters looking to expand their horizons were non-profits or institutionalized tenants not overly hit by corporate downsizing. Pepperdine University signed on for 37,349 square feet at First Financial Plaza, 16830 Ventura Blvd., in Encino. Privately owned Glenborough LLC, which has nearly $3 billion of assets under management, was eager to lock the educators in for 10 years.
East Valley brokers were similarly gloomy, noting that Westside firms were coming over the hill to kick tires and not much else. “It’s really hard to find (comparable sales data) on the sales side, because there’s just not much out there,” bemoaned Stacy Vierheilig-Fraser, senior managing director of Charles Dunn Co. Inc. in Studio City,
Still, the East Valley submarket has been the most resilient, showing just a slight uptick in vacancies from 7.9 percent to 8.6 percent.
But even the sale of the Valley’s tallest building, 10 Universal City Plaza, didn’t produce many grins. The 36-story tower traded hands in a one-day auction, with a partnership of Normandy Real Estate Partners and Five Mile Capital Partners paying $305 million. The property only became available after the site’s owners defaulted on a mezzanine loan in January.
Office Market At a Glance
Inventory: 28.2 million square feet
Under Construction: 180,000 square feet
Class A Asking Rents: $2.60
MAIN EVENTS
– Pepperdine University added more space to its satellite campus in the central San Fernando Valley, signing on for 37,349 square feet at 16830 Ventura Blvd., Encino. That’s roughly one-fifth of the entire Class A property, which sits at the corner of Ventura and Balboa boulevards. The 10-year deal with Glenborough LLC was worth approximately $15.5 million.
– Warner Bros. handed off 13,590 square feet of space to entertainment database firm Imdb.com inside the Galleria, 15301 Ventura Blvd, in Sherman Oaks. The sublease at the prime Douglas Emmett site represents the last portion of the roughly 200,000 square feet the entertainment firm had put on the market. Terms, which run through April 2016, were brokered at $2.05 per foot, down from an original asking price of $3.25 two years ago when the space first became available.
– The San Fernando Valley’s highest office tower, 10 Universal City Plaza, traded hands in a one-day auction that pointed to the further decline in commercial office values in the area. The winning bidder was a partnership of Normandy Real Estate Partners and Five Mile Capital Partners, which paid $305 million for the 36-story, 820,000-square-foot high-rise.
– Health club marketing and advertising firm Captive Media Inc., took 10,000 square feet at Warner Premier, a 61,210-square-foot Class A building in the heart of Warner Center. Terms for the five-year deal, at 5550 Topanga Canyon Blvd. in Woodland Hills, from Equity Office Properties were not disclosed, but sources estimated the price was close to $2.25 per foot, full-service gross.
