Though demand has yet to fully recover from the downturn, the Westside office market posted its best average vacancy rates and asking rents in more than two years.
Westside submarkets from Beverly Hills to Brentwood to Marina del Rey-Culver City all saw modest drops in vacancy rates in the second quarter, according to Jones Lang LaSalle Inc. The overall vacancy rate in the sprawling market dropped six-tenths of a point to 16.3 percent, the lowest since the end of 2009. Class A asking rents rose to $3.70, the highest since the first quarter of 2010.
Experts said the numbers reflected a rebound but cautioned against reading too much into one quarter.
“There’s an overall sentiment that tenants are financially a little bit stronger and able to make longer-term commitments,” said Blake Searles, a broker at Jones Lang LaSalle. “A lot of good things are happening, though there still is a lot of available space out there.”
For once, the falling vacancies weren’t fueled by Santa Monica, which has been red hot since last year as tech firms snatched up creative office space. The city actually gave back 137,000 square feet, the most of any Los Angeles County submarket in the quarter, pushing up its vacancy rate to 11.8 percent. Searles partly blamed departures by large tenants such as law firm Greenberg Traurig LLP, which moved from the Water Garden office campus to Century City. Still, asking rents rose two cents to $4.39, again the highest in the county.
Elsewhere, Beverly Hills and Century City saw vacancies drop about one point each, to 12.3 percent and 15.8 percent, respectively. Beverly Hills has seen vacancies fall some six points since last year, with demand particularly high in its Golden Triangle area around Rodeo Drive. West Hollywood gave up some space but maintained the county’s lowest vacancy rate at 6.6 percent.
Mike Catalano, executive vice president at Studley Inc., said the mixed signals reflect a market coming off the bottom, but also leasing demand that would not fully come back until the region’s employment outlook improves.
“While there might be some specific submarkets doing well – and I think Santa Monica, Culver City and the triangle portion of Beverly Hills are among those – we don’t think that an overall spike is in the near future,” Catalano said. “Our clients are tenants and they are still trying to be more efficient and cost-conscious whenever possible. They are not doing a whole lot of permanent hiring.”
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