Major events in Los Angeles County commercial and industrial submarkets in the third quarter.
A year and a half ago, when the Tri-Cities market had a whopping 1 million square feet of new office space set to come online smack in the middle of a dismal economy, the area braced itself for a spike in vacancies.
And here we are. Vacancies rose more than half a point in the Tri-Cities during the July-September period to 19.9 percent, nearly double the rate of two years ago, according to Grubb & Ellis Co.
The Glendale and Burbank submarkets, which took on the majority of the new – and empty – office space, had it the worst. Glendale vacancies rose more than a point to 23 percent, while Burbank clocked in with 19 percent, an increase of nearly two points. Pasadena, with a 17.8 percent rate, absorbed some space.
Overall, Tri-Cities gave back just over 134,000 square feet last quarter, about the same amount as during the second quarter. Class A asking rents fell 3 cents to $2.87 last quarter, off about 5 percent from a year ago.
The good news? With zero office space under construction, things can only get better.
“The worst has already hit and now it’s just a matter of absorbing some space,” said Shaun Stiles, senior vice president, Colliers International. “We’re starting to see more activity in the market and some deals getting done.”
Among the largest transactions was the sale of MPG Office Trust’s vacant 187,973-square-foot Glendale office building to Lincoln Property Co. for a rumored $120 per foot. Stiles said he wasn’t sure the new owner would reduce rents to fill it.
“Rents are already down significantly from where they were a few years ago,” he added. “I don’t know that anybody’s going to be able to substantially undercut the market much more.”
Office Market At a Glance
Inventory: 19.5 million square feet
Under Construction: 0
Class A Asking Rents: $2.87
- TMT (Thirty Meter Telescope), a group constructing what will be the world’s most powerful telescope, inked a five-year lease to take 14,000 square feet of office space in Pasadena for about $1.8 million. Private equity investment firm TA Associates owns the property at 1111 South Arroyo Parkway.
- Welter Law Firm P.C., a Herndon, Va.-based firm that specializes in employment, business and franchise law, opened an office at 2600 W. Olive Ave. in Burbank., its first branch outside Virginia.
- SWCA Environmental Consultants signed on to occupy 11,878 square feet in an office building at 150 South Arroyo Parkway in Pasadena for a total consideration of just under $1.6 million. Tamaran is the landlord.
- A private investor purchased a 42,000-square-foot shopping center at 475 Foothill Blvd. in La Canada Flintridge from developer Dollinger Properties for $16 million. Retail tenants at the 15-year-old property, completely leased at time of sale, include Trader Joe’s, Starbucks, Petco and Union Bank.
- Owner-user Swan Swan Swan & Swan, a family partnership that owns and operates Cygnet Stamping & Fabricating, purchased a 22,842-square-foot industrial property in Glendale for $3 million. The Brown Family sold the building, located at 910-916 Western Ave.
- The Livingstone Hotel and Apartments, a historic brick structure at 123 Los Robles Ave., has been converted to 32 luxury condominiums by developer Povac Investments Inc. Povac plans construction of a new building as part of the complex’s second phase.
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