Major events in individual commercial and industrial real estate markets across the area in the fourth quarter.
Westside asking rents are lower than they have been in years, but landlords aren’t stopping there, courting potential tenants with concessions to fill a growing vacancy rate.
The strategy might be working. For the first time in 2009, the submarket’s net absorption rate climbed into the black, hitting 91,917 square feet last quarter, according to figures from Grubb & Ellis Co.
The average Class A asking rent fell 67 cents from a year ago to $3.86, while the Class B asking rent landed at an even $3, off 78 cents. Rates on the ground are even lower.
“Landlords are still throwing in a ton of concessions, particularly in terms of free rent. You’re seeing deals going easily effectively 20 percent under what they’re asking,” said Amir Araghi, a transaction services associate with Grubb. “Even on the strongest buildings, there’s still a 10 percent gap.”
After a year of little sales activity, buyers began showing up, especially in higher-end markets. In one example, a 5,000-square-foot office building on Venice’s swanky Abbot Kinney Boulevard sold to an entrepreneur for $4.46 million, or $891 per square foot.
Tami Pardee of Pardee Properties, who worked the deal, said the price was lower than the street’s record-breaking $1,134 per square foot in 2007, but proves buyers are still willing to pay a premium to be in certain neighborhoods.
“Abbot Kinney is absolutely a passion buy. If you’re crunching numbers as an investment, they’re never going to make sense,” she said. “People down there want to be there and want a draw for their employees.”
Overall, Westside vacancies edged up two-tenths of a point to 15.3 percent. Westwood got hit the hardest, jumping nearly two points to 20.1 percent. Beverly Hills actually saw a minor decrease to 14.4 percent.
Office Market At a Glance
Inventory: 43.7 million square feet
Under Construction: 551,058 square feet
Class A Asking Rent: $3.86
Accounting firm Nigro Karlin Segal & Feldstein signed a 10-year lease for 50,024 square feet of space at 10960 Wilshire Blvd. in Westwood in a transaction reported to be worth $22 million. The firm will relocate from its current location in Century City and will take over the fifth and sixth floors of the 595,600-square-foot building.
Playa Vista’s 64-acre office project, a joint venture between Tishman Speyer Properties LP and Walton Street Capital LLC, made up the majority of the Westside’s 551,000 square feet under construction last quarter. Although Belkin and USC have reportedly signed on as tenants at the planned 1.6 million-square-foot office park, initially slated for delivery by 2012, the owners stopped payment on the mortgage in the summer, prompting the lenders to put the note up for sale.
Direct-response marketer Guthy-Renker LLC renewed 70,000 square feet it occupies at 3340 Ocean Park Blvd. in Santa Monica in a deal worth $14 million. Equity Office Properties is the landlord.
An entrepreneur purchased a 5,000-square-foot, two-story architectural office building at 1015 Abbot Kinney Blvd. in Venice for $4.46 million, or approximately $891 per square foot, from Robert W. Douroux. The property includes living space on the top floor and the buyer plans to use the office for an Internet-related company.
Investment group So Nice LLC bought a two-story office building at 193 N. Robertson Blvd. in Beverly Hills for $3.6 million, or about $900 per square foot. FH Distributors sold the 4,000-square-foot property, which is fully occupied.
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