The Wilshire Corridor gained some traction early this year, but real estate activity was relatively static over the summer as economic fears grew.
The commercial district stretching from downtown Los Angeles to Beverly Hills saw its vacancy rate inch down two-tenths of a point to 18.3 percent as modest space was taken off the market, according to Jones Lang LaSalle Inc.
“People worry about a double-dip recession and so their perception has shifted about the bottom of the market. They think maybe they could get a better deal if they wait,” said Jay Martinez, a Sherman Oaks-based principal at Lee & Associates who does business along the corridor.
The market’s activity was largely driven by the Miracle Mile, the lone bright spot. The neighborhood’s vacancy rate fell 1.6 points to 13.8 percent as 95,007 square feet was taken off the market. Generous landlords moved deals along as Class A asking rents stayed steady at $2.50 a square foot.
“Miracle Mile has benefitted from companies upgrading and landlords giving more space as concessions,” said Steven Kolsky, managing principal with Newmark Knight Frank.
Anthony Gatti, a managing director at Jones Lang LaSalle, said lowering long-term rates and the Hollywood neighborhood renaissance have made Miracle Mile increasingly attractive, particularly to entertainment and creative firms.
He expects the area to continue to grow given the availability of space in high-quality buildings with lower prices than Beverly Hills and Century City. “As firms become more price sensitive to the rental rate and overall cost structures, Miracle Mile will be a market that more firms look to,” he said.
At the other end of the corridor in Wilshire Center, Martinez said small Koreatown business owners taking advantage of streamlined Small Business Administration loan products are fueling small and midsize commercial sales.
“I closed 15 buildings last year and 11 of them had SBA financing. My ratios are on track to do a similar amount this year,” he said.
Tenants have the upper hand in leasing, even though landlords kept asking rents steady at $1.73 per square foot. The reality was that some 41,000 square feet of space was given back, driving up the vacancy rate nearly a point to 21.3 percent.
“There are a lot of good opportunities. The landlords still have to be very aggressive to retain and attract tenants,” Kolsky said.
The Park Mile district saw its vacancy rate rise 3.2 points to 26.9 percent as the neighborhood gave back 28,194 square feet. Class A asking rents are at $2.15, where they have remained since the first quarter of last year.
- The Sundance Institute, the Robert Redford non-profit that supports independent filmmakers, took a 10-year lease on 15,000 square feet in 5900 Wilshire Blvd., Miracle Mile’s tallest building at 30 stories. The property, directly across from the Los Angeles County Museum of Art, recently underwent a $34 million renovation.
- The Academy of Coteur Art, a fashion school, relocated from Pacific Design Center to 5700 Wilshire Blvd. at Wilshire Courtyard, taking a two-year lease on 10,000 square feet. The building also houses the Oprah Winfrey Network.
- A public interest law firm, the National Health Law Program, leased 4,714 square feet at 3701 Wilshire Blvd. in the Wilshire Colonnade East. Monthly rent on the 10-year lease is estimated at $1.85 a square foot. The leasing agent was Charles Dunn Co. Inc.
- Korea America Peace Church purchased a three-story office building with 40,846 feet at 505 S. Virgil Ave. Asking price for the Class B building constructed in 1963 was $5.2 million, or $127 a square foot. The Koreatown property has 82 secure parking spaces and was renovated in 1986.
- A La Canada Flintridge couple looking for space for their business purchased 3460 W. Olympic Blvd. in Mid-Wilshire for $1.1 million. The 2,937-square-foot sale was made with a $200,000 deposit and $881,000 in financing from Saehan Bank.
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