The Wilshire Corridor experienced a relatively flat fourth quarter in 2012, prompting landlords to raise rental rates by a penny a foot.
The vacancy rate in the submarket, comprising Miracle Mile, Park Mile and Wilshire Center, inched up three-tenths of a point to 19.2 percent in the period ended Dec. 31 compared with the previous quarter, according to Jones Lang LaSalle Inc.
In total, the 11.2 million-square-foot office market gave back 36,850 square feet, a loss attributed to the Miracle Mile, where 92,288 square feet came back on the market. The vacancy rate in that submarket rose nearly two points, to 13.9 percent, as firms downsized or moved.
“This is just a treading-water scenario,” Brian Niehaus, a vice president at Jones Lang LaSalle. “Miracle Mile is a 5 million-square-foot office market, that (negative net absorption) is hardly anything.”
Despite the numbers, the interest was high in the Miracle Mile, which is popular with creative and entertainment firms.
Phillip Sample, a senior vice president at CBRE Group Inc., said he saw ample activity in the fourth quarter. Sample holds the listings at the Miracle Mile’s 5055 Wilshire Blvd. building, which was only half-occupied last year and is projected to be 90 percent full within the next two months.
“The activity has been out of this world,” he said.
Nearby, ad firm McCann Erikson USA Inc. renewed its lease for nearly 89,000 square feet at the Wilshire Courtyard, at 5700 Wilshire. Financial terms were not disclosed but monthly rates in the building average about $2.94 a square foot, according to CoStar Group Inc.
That activity allowed landlords to raise Class A asking rates by a penny in the Miracle Mile area to $2.69, while the broader Wilshire Corridor market saw a one cent rate bump to an average of $2.22 a foot.
Notably, the Wilshire Center and Park Mile markets, which typically perform worse than Miracle Mile, showed slight improvement. Wilshire Center absorbed 4,469 square feet, while 50,969 square feet came off the market in Park Mile in the fourth quarter, an improvement over each submarket’s five-figure give-back of the previous and year-ago quarters.
Wilshire Center’s vacancy rate dropped one-tenth of a point to 23.3 percent; Park Mile reduced its vacancy rate by nearly six points to 26.8 percent over the previous period.
Niehaus said those two markets typically become attractive to companies looking for no-frills, inexpensive space and will remain so into the future. Meanwhile, Miracle Mile is expected to heat up as the booming tech and entertainment industry continues to look for space.
“Wilshire Center continues to be a cheap alternative for government and non-profits and Korean firms that want to be in that market,” he said. “As more and more tech companies look to get into the content market, there will be spillover that will take up some of these spaces in Miracle Mile.”
– Jacquelyn Ryan
New York’s Tishman Speyer Properties LP closed on the purchase of the Wilshire Courtyard, at 5700 Wilshire Blvd., for $423 million, the highest office sale price in Los Angeles County in eight years. It purchased the property from RREEF, a unit of Deutshe Bank Group, which had put a minority share on the market but later decided to sell the building.
McCann Erikson USA Inc., an advertising agency owned by Interpublic Group of Cos. Inc., renewed its lease for 90,000 square feet at 5700 Wilshire Blvd. Terms were not disclosed but rates at the building average $2.94 a square foot monthly.
An 81-unit apartment building at 951 S. Oxford Ave. traded hands for $15.3 million, the highest multifamily sale price in the market last quarter. Oxford Garden Apartments LLC, a West L.A. limited liability corporation, bought the Mid-Wilshire building from Beverly Hills’ Oxford Gardens LLC in December.
Wilshire Christian Church sold its 42,950-square-foot church at 634 S. Normandie Ave. for $9 million in November. Los Angeles Oasis Christian Church bought the property for its congregation after selling its former 5100 Wilshire Blvd. location.
Los Angeles Oasis Christian Church sold its 5100 Wilshire Blvd. building to Korda Group, a West L.A. multifamily investor and developer, for $6.55 million in October. Korda plans to build an apartment-retail project at the site.
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