Main events in Los Angeles County’s submarkets.
One of the Westside’s trophy properties hogged the spotlight in the third quarter. The 97 percent-leased Lantana Entertainment Media Campus, at Olympic and Exposition boulevards in Santa Monica, traded for a whopping $328.4 million in July.
A German real estate fund, Jamestown 28, purchased the four-building campus for $677 a square foot from Lionstone Group.
“Santa Monica continues to be the market with the greatest stability and consistently high absorption,” said Neil Resnick, a principal at Avison Young Inc. “It provides not only a community feel with tremendous amenities but also minimizes having to contend with the ongoing agony of addressing the north-south 405 corridor.”
The oceanfront submarket remained tight at 13.3 percent vacancy in the third quarter, up slightly from 11.5 percent at midyear, according to data from Jones Lang LaSalle Inc. Average asking rates ticked up to $4.64 a square foot – highest on the Westside – from $4.61 in the second quarter.
Overall, the Westside charted 16.5 percent vacancy in the third quarter, barely changed from 16.8 percent at midyear and 17 percent one year ago. Average asking rates held steady at $3.85, up a penny from last quarter and 12 cents over a year ago.
“Location and quality of space determined leasing velocity,” explained Travis Landrum, a partner at Industry Partners. “Deals sign much faster in high-quality spaces, while second- and third-generation spaces lingered on the market.”
Creative and entertainment companies and the businesses that support them continued to drive the Westside market, particularly in Silicon Beach; Playa Vista; and the Hayden Tract, where the largest lease of the quarter was inked. Beats Electronics, a maker of audio products and equipment, took 110,000 square feet at WorkScapes, 8600 Hayden Place and 8550 Higuera St. Terms weren’t reported.
Two other leases were inked at Playa Vista’s Reserve, a renovated industrial/warehouse space at 13031 W. Jefferson Blvd., in the quarter. Sony PlayStation took 80,000 square feet and Team One Advertising leased 64,000 square feet. Terms were not disclosed for either transaction.
While new tenants continue to flock to the market, “leasing in the third quarter was mostly fueled by renewals,” noted Connie Hwang, vice president of research at Avison Young. “Landlords gave tenants attractive options like rent discounts and improvement allowances.”
In the largest renewal, law firm Akin Gump Strauss Hauer & Feld reupped for 64,500 square feet at 2029 Century Park East in Century City. Elsewhere, USC’s Institute for Creative Technologies renewed its 29,850-square-foot space at 12025 Waterfront Drive in Playa Vista. In addition, Military Entertainment Public Relations renewed for 15,261 square feet at 10880 Wilshire Blvd. in Westwood.
Looking ahead, brokers expect the spotlight to shine on Century City, where a major sale took place in the quarter and the high-end Century Park Towers is on the market. Commonwealth Partners purchased 504,000-square-foot 1888 Century Park East for $305 million, or $604.53 per square foot.
That submarket’s fundamentals are attractive to investors. Vacancy has been steadily declining all year, from 15.6 percent at the close of last year to 13.8 percent in the third quarter. Average asking rates, at $4.18 a foot, remain among the highest on the Westside, second only to Santa Monica.
– Margot Carmichael Lester
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- REAL ESTATE QUARTERLY: Submarket Gains More Ground as Landlords Run Up Asking Rates
- WESTSIDE: Sun Still Shines in Santa Monica As Firms Fight for Office Space
- Real Estate Quarterly: Rent Hike by Tishman Speyer Inspires Other Owners in Westwood
- Santa Monica Paces Submarket As Dot-Com Recovery Persists
- Tight Beverly Hills, Santa Monica Bolster Adjacent Submarkets
- Santa Monica Activity Returns to Levels of the Dot-Com Era
- Strength of Submarket Fades but Asking Rates Remain High
- WESTSIDE: Media Content Companies Help Tech Firms Fill Creative Space