The Los Angeles County office market continued to heat up for its third consecutive quarter, helping reinvigorate construction and redevelopment across the area to levels last seen five years ago.

The countywide office vacancy rate dropped two-tenths of a point to 17 percent in the quarter ended March 31 compared with the previous quarter, according to data compiled by Jones Lang LaSalle Inc. Tenants took 701,386 square feet of office space off the market, about 36,000 square feet less than the previous quarter but a marked improvement from the 626,083 square feet the county gave back in the year-ago period.

“Certain parts of the city are more bright than others, but the market is dynamic and getting stronger,” said Jonathan Larsen, regional managing principal at Cassidy Turley Inc., who oversees deals across the county. Still, he added, “the stronger areas are really carrying the weaker areas.”

The Westside, as usual, led the recovery. With vacancies at 9.5 percent, Beverly Hills became the only submarket in the single-digit range. Santa Monica, close on its heels, boasted a rate of 10.4 percent. The two cities reported the county’s lowest vacancy rates.

The Westside, chock-full of tech and creative companies that make up the fastest-growing local submarket, is particularly hot. Among the more buzzworthy of the first quarter’s deals was San Francisco microblogging site Twitter Inc. signing a deal for 17,000 square feet to open its first permanent L.A. office at 150 Pico Blvd. in Santa Monica.

As these more popular neighborhoods lease up and rental rates start to climb, nearby markets are starting to benefit.

“The market is awfully tight at the moment,” said Andrew Jennison, a partner at Santa Monica brokerage Industry Partners. “There are not a lot of large blocks of space available, so consequently companies are looking east and south for alternatives.”

Indeed, the South Bay continued to be a low-cost beachside alternative for creative firms, and its vacancy rate dropped down a half-point to 21.4 percent. E-commerce company Just Fab Inc., which inked the largest deal in the submarket last quarter, almost doubled its size with another lease for 95,000 square feet at 800 Apollo St. in El Segundo. By leasing in that city, the company was able to secure a large amount of space and take advantage of the average monthly rental rates that are $2 less a square foot than in pricier Santa Monica.

The San Fernando Valley also showed signs of improvement as vacancy rates dropped seven-tenths of a point to 14.1 percent overall. The Central Valley, which includes Sherman Oaks, saw its vacancy rate drop to 11 percent, the third-lowest rate in the county.

Still, some submarkets remain slow to recover. The Wilshire Corridor saw its vacancy rate rise again, jumping two-tenths of a point to 20.8 percent as one of its highest-profile tenants, Oprah Winfrey Network, announced it would be moving to West Hollywood.

The overall tightening supply had landlords feeling confident enough to raise average Class A monthly rental rates to $2.98 last quarter, a full 18 cents a foot above the same period a year earlier.

Jim Kruse, senior managing director at CBRE Group Inc. said it’s not just rental rates that are changing. Landlords are also pulling back on concessions as part of deals, and in some cases even beginning to ask for annual increases in rates.

“It’s in the landlord’s favor now,” he said. “There are 3 or 4 percent bumps in (annual) lease rates being achieved in most of these markets and so it’s all really pretty bullish. The rates are moving up but free rent is kind of coming down.”

The improvement has developers hustling to break ground on projects in time for an anticipated thriving office market in coming years.

More than 1.2 million square feet of new office space are under construction across the county, according to JLL. But an additional 1.2 million square feet of Class C space is estimated to be under renovation as developers seek to update buildings or convert warehouses into creative office space, according to Michael Soto, Transwestern research manager. Soto said you have to go back to 2009 to find 2.4 million square feet of new office space in the pipeline.

“New construction rises with rent and tends to go down when rents bottom out,” he said. “With development, it’s about timing. You don’t want to break ground when the market is peaking because it might crash. But rents are slowly beginning to go up again and they want to time the market.”

In the first quarter, Miracle Mile developer J.H. Snyder Co. broke ground on a 245,000-square-foot creative office development, 959 Seward, in Hollywood. In Pasadena, IDS Real Estate Group broke ground on a long-anticipated Playhouse Plaza, which will add 124,000 square feet of office space.

Walter Conn, president of Charles Dunn Co. Inc., said even somewhat sluggish areas like downtown Los Angeles are caught up in the development rush.

“We haven’t had cranes in downtown in who knows how long and now there are a lot of them,” he said. “The interest is there and the capital is there.”

Sales across the county picked up, too. In the largest single deal, Hines Global REIT Inc. bought the five-building Howard Hughes Center on the Westside for $498 million. Santa Monica developer Worthe Real Estate Group bought the Tower Burbank, a 485,000-square-foot office building, for $109 million in the largest individual building sale in the county.

As for the industrial market, it again outshined the office market as the vacancy rate dropped six-tenths of a point to 4.5 percent. The San Gabriel Valley was the strongest performer, witnessing a nearly full point improvement to 3.5 percent vacancy. Not surprisingly, developers are responding. Nearly 2.2 million square feet of industrial space is under construction across the county.

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