“Twenty years ago, the Westside was unquestionably a professional and business services market – law, banking, accounting, advertising. Today, it encompasses a creative sector that continues to grow and flourish,” said Connie Hwang, vice president of research for Avison Young.
The Westside seems to always be in demand.
Data from Jones Lang LaSalle Inc. show overall asking rates for the Westside reached $3.84 a square foot in the second quarter, a 14-cent year-over-year increase and a 4-cent increase from the first quarter. Vacancy levels dropped a bit to 16.8 percent in the second quarter from 17.4 percent in the opening period.
Santa Monica ($4.61 per square foot), Century City ($4.24) and Beverly Hills ($4.15) led the submarket in Class A average asking rates. And in terms of vacancy rates, Santa Monica and Beverly Hills have the lowest in Los Angeles County with 11.5 percent and 11.7 percent, respectively. Only the Eastern San Fernando Valley submarket, at 10.3 percent, is tighter.
“Specific tenants need to be in Beverly Hills and Santa Monica, so landlords can push rental rates a little and tenants can still conduct business,” said Anthony Gatti, managing director at Jones Lang LaSalle. “Everybody threatens to move, but they’re not moving, and these landlords are starting to be more cognizant of the comps associated with moving versus staying put.”
One such deal was made by Netflix Inc., which renewed and expanded to 32,300 square feet at 335 N. Maple Drive in Beverly Hills. Terms were not disclosed.
But not all Westside markets are thriving. Vacancy remained high in Brentwood (25.7 percent) and Marina del Rey-Culver City (28.4 percent), keeping average asking rates low. Landlords of Brentwood’s Class A space were asking $3.22 per square foot on average in the second quarter; in Culver City and Marina del Rey, asking rents were the lowest on the Westside at $2.86.
But available space at affordable prices paid off for Culver City’s Blackwelder property, an adaptive reuse of a former cabinet and furniture manufacturing facility at 3101-3242 La Cienega Blvd. Two leases were inked there in the second quarter. Modeling agency Photogenics Media took 3,200 square feet in two buildings in a deal valued at $1.1 million. Philadelphia events group Sparks Marketing Group established a West Coast office with a three-year lease for 2,600 square feet in a deal valued at $526,000.
The Westside’s overall fundamentals appealed to investors, who were active in the second quarter.
“The second quarter showed incredibly robust activity, a combination of investors looking at the Westside as undervalued and a sense that the leasing market is on the cusp of a significant recovery,” said Bob Safai, a partner at Madison Partners. “The lack of product in the marketplace translated into a lot of attention being paid to the assets that were being marketed.”
Case in point: 150 and 151 El Camino Drive in Beverly Hills. The 119,500-square-foot former home of William Morris Endeavor sold for a whopping $66 million in June. Santa Monica and West Los Angeles each also saw two investment deals.
Looking ahead, Hwang expects further improvements across the seaside submarket.
“While the private sector will add jobs at a tempered rate, the public sector will continue to be taxed with cuts and layoffs,” she said. “But overall, market conditions are continuing to improve, thus affecting leasing and investments. Construction in both residential and commercial is starting to pick up and the economy is slowly continuing its uptick.”
– Margot Carmichael Lester
Netflix Inc. renewed and expanded to 32,300 square feet at 335 N. Maple Drive in Beverly Hills for undisclosed terms.
At 3101-3242 La Cienega Blvd. in Culver City, Photogenics Media took 3,219 square feet valued at $1.1 million and Philadelphia-based Sparks Marketing Group inked a three-year lease for 2,579 square feet valued at $526,000.
NFL Networks extended and expanded to 150,000 square feet at 10912 Washington Blvd. in Culver City.
Two Santa Monica properties changed hands: a 52,700-square-foot building at 2825 Santa Monica Blvd. sold for $27.5 million and a 7,500-square-foot structures at 1448 Lincoln Blvd. and 1447 Seventh St. sold for $5.3 million.
An 89,000-square-foot building at 12555 Jefferson Blvd. in West Los Angeles traded for $27 million.
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