Asking rents in the Westside office market rose to their highest level in three years in the fourth quarter, driven by continued demand from tech, media and entertainment businesses.
Class A asking rents were $3.77, up from $3.73 the previous quarter, according to Jones Lang LaSalle Inc. The overall vacancy rate was flat at 17 percent, with a strong performance from Santa Monica offsetting slight vacancy increases in most other submarkets.
Santa Monica, ground zero for the explosion of tech and creative companies in the region, continues to lead the way. It ended the October-December period with the highest Class A asking rates in all of Los Angeles County, at $4.73 a square foot. That was up from $4.70 the previous quarter and $4.28 a year ago.
The seaside city saw net absorption of 168,000 square feet, dropping its vacancy rate to 12.1 percent as tech and creative companies continue to stream in, including Acento Advertising Inc., which relocated from West Los Angeles and signed a lease for 19,000 square feet at 2001 Wilshire Blvd.
“There’s a lack of supply and availability, while demand is coming from tech and entertainment companies,” said Andrew Jennison, a partner at brokerage Industry Partners. “Professional services companies are willing to pay the freight and do what it takes to have an office in Santa Monica.”
The rest of the region was a mixed bag, with six out of the other seven submarkets experiencing small upticks in vacancy, but most also seeing a rise in asking rents.
The vacancy rate in Beverly Hills rose a half-point to 11.9 percent, while rents there rose three cents to $3.61 a square foot. The Marina del Rey-Culver City area’s vacancy rate remained unchanged at 30.8 percent, while rents rose two cents to $2.81 a square foot.
West Hollywood, meanwhile, has had a high vacancy rate since the opening of the Pacific Design Center’s Red Building last year, which added a few hundred thousand square feet of empty space and remains almost entirely unleased. The submarket’s vacancy rate was once the lowest in the county, but nearly tripled after the Red Building’s opening. Vacancies rose seven-tenths of a point to 18.8 percent.
Blake Searles, an associate at Jones Lang LaSalle, said rents would continue to rise in Santa Monica, and drive tenants elsewhere.
“You didn’t see a lot of movement over the last couple of years because the lack of capital to move or reconfigure precluded companies from doing so,” he said. “But now you’re seeing more activity on that front.”
– Alfred Lee
New York real estate investment firm Clarion Partners LLC bought a four-story office building at 100 N. Crescent Drive in Beverly Hills’ Golden Triangle from Clarity Realty Partners LLC for $80 million. It is the highest price for a Westside office building since 2010 and the highest sale price for the city of Beverly Hills in the last decade.
The U.S. division of Rome’s Sorgente Group reached an agreement to buy Santa Monica’s landmark Clock Tower office building at 221-225 Santa Monica Blvd. for $35 million, sources told the Business Journal. At $655 a square foot, it is the richest Class A office building sale in the city in three years.
Online video content producer Alloy Digital LLC, a subsidiary of Alloy Media LLC in New York, signed a lease for 34,003 square feet at 8750 Wilshire Blvd. in Beverly Hills. Sources estimated the deal with landlord Amir Development to be about $8 million. With the move, Alloy consolidated its previous offices in Miracle Mile, Hollywood and Santa Monica.
French billionaire Bernard Arnault acquired a storefront at 319-323 N. Rodeo Drive in Beverly Hills from Beverly Hills real estate firm New Pacific Realty Corp. for $85 million. The deal is believed to be the highest on a square-foot basis ever in Los Angeles County. Arnault paid $11,971 a square foot for the 7,100 square-foot building.
Acento Advertising Inc. signed a seven-year, $4.36 million lease for 19,000 square feet of office space at 2001 Wilshire Blvd. in Santa Monica. The company relocated its office from West Los Angeles.
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