The more things change, the more they stay the same.
While the Wilshire Corridor landscape and tenant mix shifted significantly in the fourth quarter, the data dashboard didn’t move dramatically, according to research from Jones Lang LaSalle Inc.
Overall vacancy stayed high, ending the year at 19.9 percent, down slightly from 20.6 percent at the close of 2013. Average asking rates for Class A office space remained in the low $2.40s all year, coming in at $2.40 a square foot for the final quarter versus $2.38 a year ago. The asking rate was down slightly – and the vacancy rate inched upward – compared with the third quarter.
“The growth of vertical residential – that’s where the storyline starts,” said Lee Shapiro, executive vice president of Kennedy Wilson’s brokerage group.
The growing residential population and the promise of the Metro Purple Line extension down Wilshire Boulevard could inch asking rates up. In areas where the subway has already arrived, Shapiro said, rental rates have climbed to be among the highest in the submarket. He expects to see the same along the Wilshire Corridor.
Investors took note of the trend toward more use diversity.
Two mixed-use properties traded in Wilshire Center. Herald Kim purchased the office-retail strip center at 2528 W. Olympic Blvd. from Salvador Han for $7 million, while Jamison Services Inc. picked up Wedding Plaza at 3000 Wilshire for $7 million from Anj Group Inc.
Wilshire Center’s fourth-quarter office vacancy dropped to 23.9 percent from 24.5 percent the previous period, thanks in part to the conversion of some office buildings to residential. Class A asking rates ticked down a penny a square foot from the prior quarter to $1.70.
Chris Giordano, an associate with Charles Dunn Co. Inc., said he expects to see rents rise on greater tenant interest.
“Wilshire Center will be a great alternative for startup companies or tenants that would like to keep their overhead down and maintain a professional-class building,” he said.
Miracle Mile recorded the only significant leases in the final period, according to Patrick Amos, a senior associate with CBRE Group Inc.
GroupM, a division of advertising conglomerate WPP, renewed and expanded at 6300 Wilshire for approximately 22,000 square feet.
Two new leases were inked at Wilshire Courtyard. Paramount Pictures took about 40,000 square feet of office space as square footage on its studio lot tightened. The Coffee Bean & Tea Leaf’s parent company, International Coffee & Tea, relocated to approximately 39,000 square feet in the 5700 Wilshire building from a stand-alone headquarters on La Cienega Boulevard.
Brokers anticipate the departure of Comcast; AEG; and E! Entertainment, one of the largest tenants in the submarket at approximately 340,000 square feet.
Miracle Mile’s office vacancy ended the year at 14.6 percent, up about a point from the previous quarter and year; Class A asking rates fell to $3.08 a square foot, down from $3.15 in the third quarter, but higher than the $3.04 recorded to end 2013.
“With over 400,000 square feet of vacancy expected to come on line in the next year or two, it will be interesting to see if landlords will be able to maintain this positive momentum,” said Amos.
– Margot Carmichael Lester
In Park Mile, Emi Ito purchased Los Angeles Medical Center, 903 S. Crenshaw Blvd., for $7.5 million from Superline Inc. The property is a three-story medical office building totaling 31,787 square feet.
The 94 percent occupied office-retail center at 2528 Olympic Blvd. in Wilshire Center traded for $7 million. Herald Kim purchased it from Salvador Han.
Jamison Services Inc. picked up Wedding Plaza, 3000 Wilshire Blvd., for $7 million from Anj Group Inc. The 34,678-square-foot two-story property was built in 1930.
Nathan F. Cogan sold the Class C multifamily property at 435 S. Alexandria Ave. to Chapman Apartments for $6.1 million, or $124,286 A unit. The 49-unit Alexandria Apartments complex in Koreatown was built in 1927 and recently renovated.
Three notable leases were inked for undisclosed terms. Wilshire Courtyard wrote two new leases of approximately 40,000 square feet with Paramount Pictures and International Coffee & Tea. CBS Radio Inc. renewed its two floors at 5670 Wilshire Blvd.
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