The Westside office market bid a hearty good riddance to 2010, a year that brought higher vacancies, negative net absorption and falling asking rents.
The final quarter was no exception, with vacancies up nearly a point to 16.4 percent as the Westside put almost 147,000 square feet back on the market, according to Grubb & Ellis Co.
Contributing to the lag are lease renewals for less space than tenants previously occupied, according to Hunt Barnett, principal, L.A. Realty Partners.
“Tenants who signed a lease three, five, 10 years ago didn’t necessarily grow into as much space as they took,” he said. “When it comes time to renew, they’re looking at the extra space and thinking about whether they really need to carry it or not.”
As usual, certain submarkets fared better than others. Century City, once a Westside darling, continued to stumble, thanks in part to Northrop Grumman Corp.’s decision to put 140,000 square feet of office space it still occupies up for sublease as it prepares to move its headquarters to Fall Church, Va.
The neighborhood’s vacancy rate rose by more than a point and a half to 15.5 percent, up from 12.4 percent during the year-earlier period. Though the submarket still boasts the Westside’s highest Class A asking rents, $4.41, rents steadily fell each quarter last year.
The historically desirable market of Santa Monica, on the other hand, continues to be a bright spot, in part because there aren’t many big chunks of space available.
“If you’re a tenant that wants 15,000 feet in downtown Santa Monica, it’s really difficult to find,” said Barnett. “You may find one space, but you won’t find five to choose from. And when supply is low and demand is steady or increasing, rents go up.”
Santa Monica saw vacancies decrease by more than 2 points last quarter, to 11.5 percent, a marked improvement from the year-earlier period, when 14.3 percent of its office space was vacant. The submarket also became the only one on the Westside to experience positive net absorption last quarter, taking 143,447 square feet off the market. Class A asking rents stayed about the same, $4.20 per square foot.
Overall on the Westside, Class A asking rents rose 2 cents during the quarter, to $3.74, off 12 cents from the year-earlier period. Class B asking rents fell by 5 percent to $2.83.
- Santa Monica-based real estate investment trust Douglas Emmett closed a $111 million sale of a 310,000-square-foot Brentwood office building at 12121 Wilshire Blvd. out of bankruptcy. The 14-story Wilshire Bundy Plaza, owned by Ezri Namvar’s Namco Capital Group Inc., was 85 percent occupied.
- Accounting firm Moss Adams LLP inked a 10-year lease to take more than 25,000 square feet from landlord Equity Office Properties at 10960 Wilshire Blvd. in Westwood. Moss Adams, which also has offices in Woodland Hills, is vacating space leased in Brentwood to move to the new location. The deal is worth $10.6 million.
- L.A.-based investor the Bakery Trust bought a 3,388-square-foot retail building in Santa Monica for $1.7 million. Marcel and Margrith Burlet sold the single-story property at 2721-2723 Wilshire Blvd., which is 100 percent leased to a clothing store and a bakery/restaurant.
- AdKnowledge, a provider of performance-based marketing systems, signed a 39-month lease to take 13,759 square feet at 10940 Wilshire Blvd., a 24-story office building known as the Tower in Westwood, in a deal worth $1.3 million. Equity Office Properties is the landlord.
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