Office Market At a Glance
Inventory: 43.9 million square feet
Under Construction: 389,058 square feet
Class A Asking Rents: $3.81
Yes, Westside vacancies are up and Class A asking rents are down, but tenants looking to scoop up swanky office space on the cheap may not have all that much luck.
“It’s hard to find a really good existing space that’s economical,” said Hunt Barnett, principal at Madison Partners. “A lot of the good spaces got picked over and leased during the first go-around, and that left a lot of landlords with the worst space they have.”
Indeed, there’s plenty of that “worst” stuff around.
After ending last year in the black, the Westside gave back a whopping 325,929 square feet, driving Class A asking rents down a nickel to $3.81, off from $4.21 from a year ago. Rates for Class B space actually increased six cents to $3.06, but were off more than 15 percent from 2009’s first quarter. Indeed, some tenants were in for a surprise.
“Most tenants renewing their leases these days are actually paying more than they were paying when that lease ended because they signed it probably five years ago,” added Barnett. “So there’s a little bit of a disconnect.”
That sticker shock prompted some tenants to cut costs by giving back 10 percent or 15 percent of their spaces, a trend that’s contributed to a higher vacancy rate that rose a point to 16.4 percent. The bright spot was West Los Angeles, which held steady at 10.5 percent, the lowest vacancy rate countywide – and a good sign for the Westside as a whole.
“I think the recovery is a long way from here, 12 to 18 months probably,” said Barnett. “But I do think the Westside will recover most quickly and rents will go up here sooner than other markets.”
- Fandango, an online seller of movie tickets, signed a seven-year lease to renew its space and expand at 12200 W. Olympic Blvd. in West Los Angeles. The company already occupied 17,865 square feet in the building and will take an additional 12,135 square feet. The building is one of three that make up Westside Media Center, a 150,000-square-foot property owned by Kilroy Realty. Other tenants, including Comcast, recently renewed leases at the complex.
- Developer Randall Miller will build a three-story, 50,000-square-foot medical office building in Santa Monica. The developer plans to lease the project, slated to be completed in 2011, to UCLA as an outpatient surgery facility. George Smith Partners is providing a $28.5 million construction loan.
- Architecture, engineering and interior design firm Cannon Design inked a 10-year lease to take 20,135 square feet at 1901 Avenue of the Stars in Century City. Financial terms were not disclosed.
- Belkin, a maker of computer accessories and connectivity devices, moved into its new 150,000-square-foot Playa Vista headquarters, two connected buildings that are part of Tishman Speyer’s 345,000-square-foot, four-building Campus at Playa Vista. Belkin, previously headquartered in Compton with another local office in Hollywood, consolidated both offices at the new site.
- A 9,940-square-foot retail building at 1641-1645 Lincoln Blvd. in Santa Monica changed hands in a transaction between private individuals for $4.15 million. The property is leased to Aaron Brothers Art & Framing, which has four years left on its lease.
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