Yet again in the fourth quarter, the Wilshire Corridor submarket was defined by some tenants leaving the Wilshire Center area and others moving to the Miracle Mile.
But with more departures than arrivals, the corridor from downtown Los Angeles to Beverly Hills saw its overall vacancy rate inch up three-tenths of a point to 18.6 percent since the third quarter while asking rents remained flat, according to Jones Lang LaSalle Inc.
So what’s driving all those departures from Wilshire Center, with its vibrant Koreatown residential and retail district? For years, the main attraction there for companies seeking office space has been cheap rent. But, with the commercial office market in a long slump, tenants now can get much better accommodations elsewhere without having to pay a fortune.
“Tenants are leaving the area because in the near vicinity there are numerous institutionally owned buildings, which are providing better space alternatives at well-priced buildings with a better mix of diverse tenants,” said Anthony Gatti, managing director in Jones Lang LaSalle’s West L.A. office.
Indeed, the Wilshire Center market had the second lowest Class A asking rates in Los Angeles County last quarter at $1.73 per square foot, a penny less than a year ago. But even that wasn’t enough to keep tenants in place. The area gave back nearly 50,000 square feet of office space and reported a vacancy rate of 22.3 percent, up more than two percentage points from a year earlier.
Meanwhile just a little further west on Wilshire, the Miracle Mile continued to grow into one of the brighter markets in the county. The area’s vacancy rate dropped to 13.1 percent, down one-seventh of a point from the previous quarter and 2.5 points from a year ago, as tenants absorbed more than 46,000 square feet.
Part of the attraction to the area was its monthly asking rent of $2.51, up a penny from the previous quarter but down six cents from the year-ago period. The rates looked like a deal to price-conscious entertainment and creative tenants, who passed on more expensive space in Beverly Hills or nearby Hollywood.
“In the last couple years, there’s been a flight of entertainment companies to the area. It’s accessible and they can be Beverly Hills adjacent without paying Beverly Hills rates,” said Katie Bernhisel, a senior associate at the downtown office of Transwestern.
Ross Stores Inc. bought its Ross Dress for Less location at 6298 W. Third St. for $45 million from Cerberus Capital Management LP. Cerberus’ former development partner Alan Casden of Casden Properties LLC had wanted to build residential units at the site.
Nara Bancorp Inc., which recently merged with Center Financial Corp. to become BBCN Bank, renewed its lease for 62,000 square feet at 3731 Wilshire Blvd. with owner Colonnade Wilshire Corp. The bank, which caters to the Korean-American market, has been at that site since the late 1990s. Financial details were not disclosed.
Portland, Ore., architecture firm Colab Architecture and Urban Design LLC moved into the ground floor of the Ratkovich Co.’s 5900 Wilshire Blvd. building. The company has a five-year lease for more than 1,000 square feet for its first L.A. office. Financial details were not disclosed.
A 61-unit apartment building at 720 S. Normandie Ave. sold for $7 million to a private investor in Laguna Beach. The previous owner let the nearly fully occupied building go into foreclosure; it was sold by California Mortgage and Realty LLC.
Twentieth Century Fox Television Inc. renewed its lease at Wilshire Courtyard, 5700 Wilshire Blvd. The production company signed a deal for 65,142 square feet at the complex, which is owned by RREEF Real Estate, a unit of Germany’s Deutsche Bank Group. Terms were not disclosed.
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