Last quarter, Miracle Mile scored the highest office property bid in Los Angeles County in the past eight years. But even that impressive endorsement couldn’t keep the greater Wilshire Corridor afloat.
Vacancy in the corridor rose to the highest point since the late 1990s, reaching 18.9 percent in the third quarter, according to Jones Lang LaSalle Inc. That was up more than a half-point over the previous period as the market gave back just over 75,000 square feet.
Most of that space came from the Park Mile neighborhood, which gave back 58,408 square feet, pushing vacancy there up seven-tenths of a point to 32.6 percent. Brian Niehaus, a vice president at Jones Lang LaSalle, said that while the numbers might look bad, it doesn’t necessarily signal a new downturn in the market.
“Almost 60,000 square feet is the equivalent of just six 10,000-square-foot tenants bumping around or just closing the door,” he said. “It’s a classic tweener market. Those tenants are going to go to Miracle Mile or a low-cost alternative in Wilshire Center.”
Indeed, the Miracle Mile continued to improve during the quarter. Its vacancy fell three-tenths of a point to 12.1 percent as it absorbed 17,883 square feet mostly in small deals by media-related tenants.
For example, Ryan Seacrest Productions expanded its lease to 13,328 square feet at J.H. Snyder Co.’s Museum Square building, at 5757 Wilshire Blvd., in August. Financial terms were not disclosed but average rates in that building are about $2.10 a square foot, according to CoStar Group Inc.
Lisa St. John, principal at L.A. Realty Partners in Century City, said significant leasing action earlier this year has made it more difficult for new and larger tenants to find available space in the market now.
“Some buildings have firmed up,” said St. John, who holds the listings for 6100 Wilshire. “Our pricing has gone up because we have so little space available.”
Landlords raised asking rates 4 cents to $2.68 on the Miracle Mile, helping to push rates in the overall corridor up three pennies to $2.21.
Rising rates are likely one reason New York’s Tishman Speyer Properties LP wanted to bid on the Wilshire Courtyard, a nearly fully occupied 1 million-square-foot office building at 5700 Wilshire Blvd. The building counts tenants such as E! Entertainment and the Business Journal.
In what would be the county’s largest office deal in nearly a decade, Tishman offered a steep bid of $423 million, or about $425 a square foot, to landlord RREEF, a real estate investment arm of Deutsche Bank Group. They are now negotiating a contract.
“Every landlord is happy about that,” St. John said. “They had to buy it anticipating stronger rental rates.”
Wilshire Courtyard, at 5700 Wilshire Blvd., might trade hands for $423 million, the highest office sale price in the county in eight years. New York’s Tishman Speyer Properties LP won the bid for the property from RREEF, a unit of Deutsche Bank Group, which had put a minority share on the market this year but ultimately decided to sell the whole building.
Nikon Corp. signed a deal to relocate its El Segundo retail store into 13,197 square feet on the ground floor of 6420 Wilshire Blvd. CoStar Group Inc. estimates its rate at $2.55 a square foot. The company plans to move into the space in November.
Advanced Alternative Media Inc. signed a three-year deal for 4,587 square feet at 5979 Wilshire Blvd. The marketing and college radio promotion company is relocating from 1290 San Ysidro Drive in Beverly Hills. Terms were not disclosed.
Ryan Seacrest Productions signed a deal at 5757 Wilshire Blvd. to expand its office to 13,283 square feet. The television producer uses the space for production but is headquartered across the street at 5700 Wilshire. Financial terms were not disclosed but average rates in the building are about $2.10 a square foot, according to CoStar Group Inc.
Personal injury law firm Goldschmid Silver & Spindel in September moved into 7,598 square feet on the fourth floor at 4221 Wilshire Blvd. The firm pays about $1.65 a square foot a month. It relocated from 3345 Wilshire.
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