A year or two ago, Westside businesses were in serious belt-tightening mode, looking to scale back office space in order to save a few bucks. These days, those belts are loosening, at least a little, thanks to lower rents and a slightly better economy.
That trend helped the area absorb 405,222 square feet during the second quarter – much better than many other county markets that gave back space, according to Grubb & Ellis Co. Vacancy rates dipped in nearly every Westside submarket, bringing the overall rate down a full point to 15.4 percent.
“Most of the activity we’re seeing is current tenants expanding and taking more space,” said Gary Weiss, principal, LA Realty Partners. “A lot of entertainment companies, business management firms, talent agencies are finding themselves actually needing more space. And this year people are doing longer lease terms.”
Just how low a renewal rate and concessions a tenant can wrangle during negotiations depends on the building and the submarket, according to Weiss. Landlords with a bevy of empty pockets are more likely to come down, of course, while those with healthier buildings might roll the dice that their tenants don’t want the hassles – or costs – that go with moving.
“The landlord knows you may save rent elsewhere but you’re going to have to spend a lot more money to move and build out new space,” he said. “Today it’s all about technology costs and infrastructure. All that unsexy above-the-ceiling-type stuff, that’s where all the money is.”
Class A asking rents fell a nickel since the first quarter to $3.76 per square foot, while Class B asking rents fell 4 cents to $3.02. Class A rates in the Century City submarket remain the Westside’s highest at $4.51 per square foot.
Office Market At a Glance
Inventory: 44 million square feet
Under Construction: 320,072 square feet
Class Asking Rents: $3.76
- Accounting and consulting firm Singer Lewak Greenbaum & Goldstein LLP renewed its lease and expanded its office space at 10960 Wilshire Blvd. in Westwood. The company will occupy the entire seventh floor of the building for 10 years in a deal worth $9.81 million to landlord Equity Office Properties.
- HBO renewed 128,000 square feet with Equity Office Partners at 2500 Broadway in Santa Monica for nine years in a deal valued at $8 million.
- New York-based law firm Kaye Scholer LLP signed a lease renewal valued at about $22 million in Century City for 42,000 square feet at 1999 Avenue of the Stars. The firm will keep two and a half of the three floors it occupies at the SunAmerica Center owned by Equity Office Properties.
- UCLA renewed its lease for 81,195 square feet at 5767 W. Century Blvd. near LAX. The 130-month deal covers 24,195 square feet on the fourth floor and 57,000 square feet on the second. Four hundred UCLA employees, charged with billing providers at area hospitals, use the building. Financial terms of the transaction were not disclosed.
- Media and marketing firm Meredith Corp. leased 28,074 square feet on the first floor of 800 Corporate Pointe in Culver City for more than six years. The 241,556-square-foot office building is part of the Symantec Southern California Campus.
- Television production firm Studio Lambert inked a three-year lease to take 20,047 square feet on the top floor at 10950 Washington Blvd. in Culver City. The firm, which also has offices in London, produces TV series, including reality show “Undercover Boss.”
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