In an office market made up of a whopping 46 million square feet, it’s no surprise that the fourth quarter ended successfully in some pockets of the Westside, and less so in others just a few miles away.
Santa Monica, one of the area’s strongest submarkets, finished out 2011 with vacancies hovering around 10 percent, 4 points lower than at the start of the year, according to Jones Lang LaSalle Inc. The submarket also boasted the highest asking rents in all of Los Angeles County, $4.28 a square foot, an increase of 8 cents over the previous quarter.
But it seems there’s no area of Santa Monica – or perhaps the entire Westside – flourishing more so than the Bayside District, a stretch of office space running parallel to the beach between Ocean Avenue and Fourth Street that is now the epicenter of what has been dubbed Silicon Beach.
“That area is now absolutely tight as a drum, 3.5 percent vacant,” said John Ghiselli, managing director at Jones Lang LaSalle. “You have technology companies, creative firms, venture capitalists and wealthy entrepreneurs who live in Malibu or Palisades or Brentwood and they don’t want to go east.”
The entertainment-driven Beverly Hills submarket, which kept its vacancies right around 14 percent, saw a couple of the Westside’s largest lease deals with United Talent Agency and Playboy Enterprises Inc. taking more than 165,000 square feet between them at Tishman Speyer Properties’ 9336-9346 Civic Center Drive complex, the former Hilton Hotels headquarters.
Meanwhile, the Marina Del Rey-Culver City submarket still struggles with the fact that nearly one-third of office space sits empty, thanks in part to the influx of square footage that came with the development of Playa Vista. Though Facebook Inc. signed for 12,000 square feet at Tishman Speyer’s 325,000-square-foot complex this year, it’s unclear if the deal will drive momentum. “That’s the theory, but it still has a way to go before it becomes an actual trend,” Ghiselli said.
Asking rents edged up slightly in nearly every Westside submarket, averaging $3.69 overall, but those rates don’t necessarily reflect the deals actually getting signed
“Quoted rents are still inflated and somewhat above market,” Ghiselli said. “The actual market is still flat, with landlords having to increase their incentives to entice tenants to sign deals.”
- Film production firm Lightstorm Entertainment Inc. sold a 26,277-square-foot office building, at 919 Santa Monica Blvd. in Santa Monica, to owner-user Santa Monica Community College District for $9.05 million. As part of the transaction, Lightstorm will continue to occupy the three-story building through the end of this year.
- United Talent Agency inked a deal to move into nearly 120,000 square feet at the Tishman Speyer-owned two-building complex at 9336-9346 Civic Center Drive in Beverly Hills, formerly the headquarters of Hilton Hotels. The firm will be vacating 80,000 square feet of office space it rents nearby at 9536 Wilshire Blvd.
- Also at the former Hilton headquarters, Playboy Enterprises Inc. rented 45,000 square feet of office space. The company, which currently occupies 75,000 of square feet in Glendale and Santa Monica, will be vacating those offices and consolidating into the new Beverly Hills space by May. Financial terms of the deal were not disclosed.
- Pabst Brewing Co. signed a five-year lease to take 8,101 square feet of office space at Atria West, a two-building, 192,000-square-foot office complex at 10635 Santa Monica Blvd. in Westwood in a deal valued at $1.3 million. The beer maker is relocating its corporate headquarters from Chicago to Los Angeles.
- Grocery retailer Fresh & Easy purchased the retail facility at 7500 Melrose Ave. in West Hollywood from LNR Partners Inc. for $8.1 million. Fresh & Easy plans to occupy the 15,978-square-foot structure, which was built in 1997.
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