The fundamentals of the Wilshire Corridor office market continued to improve, however slowly, in the third quarter.
Average asking rates rose a penny a foot from the prior period to $2.43 a square foot, but they have held relatively steady all year. The reason?
“Dominant landlords,” said Sally Zesut, associate vice president at Cassidy Turley. “Jamison and Tishman Speyer own the majority of inventory along Wilshire in Mid-Wilshire and assure no major fluctuations in rents occur. They are proactively trying to do lease up to counter move-outs.”
It’s working. Vacancy across the submarket dropped to 19.7 percent, the first time it’s been below 20 percent since the opening quarter of 2013, according to data compiled by Jones Lang LaSalle Inc.
Miracle Mile saw average asking rates for Class A space move to $3.15 a square foot in the third quarter from $3.12 at the midpoint and $3.01 to start the year.
Some of that aggressive pricing can be attributed to the sale of the New Wilshire, a 95 percent-leased, 213,000-square-foot Class A office building at 6100 Wilshire Blvd. Kennedy-Wilson Properties Ltd. sold the property to SM Management for $76.5 million in August.
Despite the gains, said Zesut, “losses in Miracle Mile at Wilshire Courtyard will continue to plague the overall Wilshire corridor for some time to come.”
Brokers are watching to see how Wilshire Courtyard and Miracle Mile backfill in the wake of media companies relocating to Hollywood or Playa Vista.
Nearby, Park Mile charted little change, but observers are keen to see how the phased move-out of Farmers Insurance Co. will impact the area’s fundamentals. The average asking rate held at $2.30 a square foot, where it’s been since the first quarter of 2012. Vacancy closed out the quarter at 27.2 percent, down a tick from 27.3 percent in the previous period, and 28.9 percent to open the year.
Further east, Wilshire Center saw declining vacancy in the third, recording 24.5 percent, down from 25 percent in the second and 25.6 percent in the first. Average asking rents have held around $1.70 to $1.75 since the third quarter of 2010.
“Surprisingly, fundamentals in Mid-Wilshire have at least stayed relatively flat due to leasing that Jamison is doing to ensure they mitigate vacancy in their properties,” Zesut noted.
As in past quarters, there were a handful of apartment trades. Most notable was Chicago-based Capri Capital Partners’ purchase of the Vermont multifamily property from J.H. Snyder Co. for $283 million, or $609,914 a unit. The 464-unit, Class A building is located at 3150 Wilshire.
Residential and office development is attracting investor interest, according to Bob Safai, a partner at Madison Partners.
“The investment by CIM in the Farmers campus has been an incredible shot in the arm for the Miracle Mile and Park Mile markets, bringing more and more activity on the institutional side,” he explained.
– Margot Carmichael Lester
The New Wilshire, a 95-percent leased, 213,556-square-foot Class A office building at 6100 Wilshire Blvd. changed hands. Kennedy-Wilson Properties, which had owned the building since 1996, sold it to SM Management for $76.5 million.
Capri Capital Partners purchased the Vermont, a 464-unit multifamily property, at 3150 Wilshire Blvd. from J.H. Snyder Co. for $283 million, or $609,914 a unit.
Naples Villas, a 21-unit Class B apartment building at 1115 S. New Hampshire Ave. in Koreatown, sold for $7.6 million, or $36,905 a unit. The Cho Family Trust purchased the property from Gilda Brooking.
Burnside Lofts, a 36-unit Class C apartment building at 649 S. Burnside Ave., was sold by Burnside Partners for $8 million, or $222.22 a unit, to Vista Investment Group.
Action Investment Group purchased a .71-acre parcel at 1019-1029 S. Serrano Ave. in Mid-Wilshire for $6 million from Superline Inc. Details were scant but the property is zoned for residential.
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