Office Market At a Glance

Inventory: 28.5 million square feet

Under Construction: 0

Class A Asking Rents: $2.43

The aftereffects of the 2008 financial meltdown pushed up San Fernando Valley office vacancies in the first quarter.

The rate reached 18.9 percent, up more than a point since the end of the year, with much of the damage occurring in the West Valley, which gave back a hefty 215,000 square feet.

Broker Robert Chavez, chief executive of Guardian Commercial Realty, blamed the flood of space on Countrywide Financial, the mortgage lender that escaped bankruptcy by selling itself to Bank of America in 2008. The leases on Countrywide’s former offices in Calabasas and Woodland Hills are expiring and showing up as vacant space, even though the buildings have been empty for years.

Even minus the Countrywide effect, the West Valley markets continued to shrink. Chavez noted a typical transaction: He negotiated a renewal for University of Phoenix in Woodland Hills for 40,000 square feet, a contraction of 4,000 square feet.

Farther east, the mediacentric markets of Studio City and North Hollywood fared better. John Sabourin, a broker at CB Richard Ellis Group, said the older tenant base has proved more resilient in the recession than the new tenants who moved into freshly built offices around Warner Center and Calabasas.

“If you took out all the development of the last 10 years, we wouldn’t have much vacant space in the market,” he said.

Rentals rates for Class A office space fell to $2.43 per square foot, down from $2.60 a year earlier.

Stacy Vierheilig-Fraser, senior managing director of brokerage services at Charles Dunn Co. in Sherman Oaks, said the effective rental rate is actually much lower if free months and other landlord concessions are included in the calculation.

“Prices have made a correction, but there’s still more to come,” she said.

MAIN EVENTS

• DG Fastchannel, an Internet advertising company based in Irving, Texas, increased its footprint at 3330 Cahuenga Blvd. West in Studio City. The company leased 4,000 square feet, in addition to 24,500 square feet taken in 2005. Financial details of the expansion were not disclosed.
• Optical Communication Products took 18,800 square feet in the Warner Atrium building at 6400 Canoga Blvd. in Woodland Hills. The building is owned by Jamison Properties, the L.A. investment company run by Dr. David Lee.
• Southern California Orthopaedic Surgeons Institute sold its medical office building of 92,000 square feet located at 6815 Noble Ave. in Van Nuys. The buyer was Health Care REIT in Toledo, Ohio.
• Los Angeles Unified School District bought an office and warehouse complex at 14649 Lanark St. in Panorama City under eminent domain. The price was $3.5 million for the 21,400-square-foot building. The district plans to build an elementary school, and bought nine residences and two other industrial parcels to complete the project.
• Goldman Magdalin & Krikes LLP took 18,000 square feet at the Trillium Towers development, 6300 Canoga Blvd., in Woodland Hills. The 12-year lease was with landlord Douglas Emmett. Financial details were not disclosed.
• Los Angeles Community Redevelopment Agency signed a 10-year lease for almost 8,000 square feet at 5250 Lankershim Blvd. in North Hollywood. The building is still built by developer J.h Snyder Co. The CRA will move in the second quarter from its present home next door at 5200 Lankershim Blvd.