Major events in Los Angeles County commercial and industrial submarkets in the second quarter.
About all you need to know about the Wilshire Corridor in the second quarter is this: Koreatown lost tenants and the Miracle Mile gained them – a dynamic that reflected the soft commercial real estate market.
With asking rents falling across Los Angeles County, the historically cheap Koreatown neighborhood was less of an attraction to tenants who could get nicer digs elsewhere at attractive rents.
Such as in the Miracle Mile.
“The Miracle Mile has become a mature market over the past six or seven years,” said Brad Feld, partner at Madison Partners. “Most of the major buildings over 200,000 square feet have been purchased by institutional ownerships and renovated into world-class projects. There are now buildings in the Miracle Mile who pull from a regional base. Companies that could have offices in Hollywood, Century City or downtown are looking at the Miracle Mile.”
The deals weren’t necessarily large in the neighborhood, but there were enough to absorb 25,747 square feet of space and drive down the Miracle Mile-Park Mile vacancy rate nearly a half-point to 15.7 percent, , according to Grubb & Ellis Co.
Still, Anthony Gatti, a managing director at Jones Lang LaSalle, said the bounty wasn’t being distributed evenly, with the best buildings doing better than others.
“Wilshire Courtyard may be full, but there are some other office buildings with vacancies. Besides Brentwood, the Miracle Mile is the softest market on the Westside,” he noted.
Even so, there was enough demand for landlords to feel they had more leverage, prompting them to raise average asking rents one penny to $2.60 per square foot.
Meanwhile, 47,077 square feet was vacated in Wilshire Center and Koreatown, increasing the submarket’s vacancy rate more than a half-point to 18.5 percent.
If there was any consolation, Gatti doesn’t expect the Wilshire Center market to get much softer, noting that most firms that moved there years ago to shelter themselves from sky-high lease rates during the boom have already left for downtown.
“Now, I don’t think that is going to happen again, at least to that scale, because most of the tenants need to be there,” he said.
Indeed, landlords held the line on asking rents, already among the county’s lowest, at $1.99 a square foot.
- The Hollywood Reporter spent the last few weeks of June moving into the 5700 Wilshire Blvd. building at Wilshire Courtyard on Miracle Mile. The trade paper and several sister publications are taking 27,000 square feet in a 10-year lease valued at $12.5 million. The publication moved from 5055 Wilshire Blvd., where it shared a larger space with Billboard, Adweek and Backstage.
- John Carrabino Management, which represents Renee Zellweger, Jamie-Lynn Sigler, Josh Duhamel and Angie Harmon, among others, renewed 1,200 square feet of office space for another year at 5900 Wilshire Blvd., according to landlord Ratkovich Co. The building also is known as the Variety Building since it contains the headquarters of the entertainment trade magazine.
- In other leases at the Variety Building, independent entertainment attorneys Elena Muravina and Carl Buchberg signed a two-year lease for 1,600 square feet. Abrams Garfinkel Margolis Bergson LLP, a full-service law firm that has been a tenant since 2008, renewed for seven more years and increased its space by 2,100 square feet. The firm now occupies 7,069 square feet of offices in the building.
- Milan Capital Management bought a 57 percent stake in the View Wilshire Tower Apartments from Federal Street Holdings LLC for $22 million. The 13-story apartment complex at 3460 W. Seventh St. was constructed in 1965 and contains 168 units. It was only 25 percent occupied at the time of the purchase.
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