Office Market At a Glance
Inventory: 14.2 million square feet
Under Construction: 0
Class A Asking Rents: $2.56
Media tenants and lower rents helped prop up the Wilshire Corridor office market in the first quarter, as a few large deals kept the growth in vacancies to a minimum.
The submarket stretching from downtown Los Angeles to Beverly Hills reported a vacancy rate of 15.9 percent, up less than a point since the end of the year, according to Grubb & Ellis Co.
The numbers could have been worse but for one big renewal. In one of the largest leases this year in Los Angeles County, E Entertainment Network renewed for 355,000 square feet at 5750 Wilshire Blvd.
However, in a sign of the times, that number represents a reduction of 30 percent, or 150,000 square feet, from the company’s current footprint.
“Landlords are on the defensive and desperate for deals,” said Chris Runyen, senior managing director at Charles Dunn Co. “This quarter there was plenty of activity, but the rents are lower than a year ago so it’s a good time for tenants.”
Asking rents are at $2.56, losing just two cents since the end of the year but off about 50 cents from a year ago.
The corridor’s higher-rent Miracle Mile and Park Mile neighborhoods lost 59,000 square feet of rented space in the quarter, while Wilshire Center in Koreatown shed about 31,000 square feet. Runyen pointed to large tenants pulling out in both areas. Los Angeles Unified School District left 60,000 square feet empty at 4201 Wilshire in Park Mile. In Koreatown, Aames Home Loan vacated 36,000 square feet.
Runyen predicted that during the next year, savvy investors will be able to pick up some buildings from distressed landlords.
- E Entertainment Network renewed for 355,000 square feet at 5750 Wilshire Blvd. Financial details were not disclosed, but the deal was reportedly valued at $130 million over 10 years. The building is owned by RREEF, while E is a unit of Philadelphia-based Comcast Entertainment.
- In another media deal, Cox Communications took 20,500 square feet at 5670 Wilshire Blvd. The lease represents a consolidation for Cox, which previously had offices at 5900 Wilshire and 6300 Wilshire. The 10-year lease gives them the entire 20th floor and half the 19th.
- Construction is on-again, off-again in the block between La Brea and Highland avenues. Beverly Hills BMW is once again building its future home at 5151 Wilshire Blvd., the former lot of Lou Ehlers Cadillac. On the other hand, work has ceased at the southeast corner of La Brea Avenue and Wilshire Boulevard after demolition crews took down the former Columbia Savings Bank. The proposed development by BRE Properties would include 482 condominiums and 40,000 square feet of first-floor retail.
- The Jewish Federation leased the seventh floor, a total of 15,000 square feet, at Paramount Plaza, 3580 Wilshire Blvd. in Koreatown. The non-profit relocated from 6505 Wilshire on the Miracle Mile.
- The medical office building at 6317 Wilshire Blvd. is being converted to a boutique hotel with 74 rooms and 50 parking spaces. The conversion will take 41,900 square feet of office space off the market.
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