It’s hard to find good news in a neighborhood where vacancies jumped a solid two points or more, but at least one broker has thought he’s found some on the Wilshire Corridor.
Chris Runyen, senior managing director at Charles Dunn Co., noted that while the corridor’s vacancy rate shot up to 14.1 percent in the third quarter, some of the losses are coming from companies downsizing, not closing as others had earlier.
That’s an improvement in this economy.
Consider Cox Communications, which occupies a total of 33,000 square feet split between 6300 and 5900 Wilshire Boulevard. Runyen is looking to consolidate the offices in one location with only 20,000 square feet.
“Not that they lost any business, but they’re getting more efficient with their layout, using cubicles instead of offices, and generally hunkering down in keeping with the spirit of the times,” he said.
Given the decadelong resurgence of the corridor – especially in the Miracle Mile area and Koreatown – most building owners are financially stable. However, even taking a glass-half-full approach, it’s hard to deny that times are still tough.
The corridor, which stretches along Wilshire Boulevard from downtown to Beverly Hills, has seen 580,000 square feet of space vacated this year. That’s taken its toll on Class A asking rents, which fell to $2.68 from $2.97 in the second quarter, according to Grubb & Ellis Co.
Koreatown, especially, is experiencing a constant attrition of small tenants, despite the area’s average rents of just $1.99, well below the neighboring Miracle Mile or downtown markets.
What’s more, the losses could accelerate in the coming months when the Los Angeles Unified School District vacates more than 60,000 square feet at Wilshire Center – a huge parcel to fill at this point in the business cycle, Runyen said.
Office Market At a Glance
Inventory: 14.2 million square feet
Under Construction: 0
Class A Asking Rents: $2.68
- Good Samaritan Hospital announced plans to break ground on a medical office building east of Koreatown in next year’s first quarter. The $83 million building at 1225 Wilshire Blvd. will add 190,000 square feet to the market when completed in third quarter 2011.
- Massachusetts Mutual Life Insurance Co. signed an agreement to vacate its offices at 4601 Wilshire Blvd. in Hancock Park. Mass Mutual occupies about 19,000 square feet and will move in February to 8383 Wilshire Blvd. in Beverly Hills.
- Allied Integrated Marketing left 15,000 square feet of space when the company vacated 4221 Wilshire Blvd. in September. The company now fills 14,000 square feet in a historic Hollywood building across from the Kodak Theater. Allied’s clients are mostly movie and TV studios, so the move brought the company closer to its customers, according to Executive Vice President Kymn Goldstein.
- Wilshire Colonnade at 3701 Wilshire Blvd. in Koreatown lost a tenant of 14,000 square feet when Aviva Center moved down the street. The non-profit moved to Paramount Plaza at 3580 Wilshire and increased its footprint to 18,000 square feet. The deal at $2.98 per square foot has a cumulative value of more than $2 million.
- California National Bank lost two subleases at the Variety Building, opening up 30,000 square feet at 5900 Wilshire Blvd. In addition, software developer Mitratech renewed, but reduced its space from 28,000 square feet to 15,000 square feet.
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